The UK’s Brexit secretary, David Davis, has engaged in a war of words with the EU’s chief negotiator, Michel Barnier, over the latter’s claims that unacceptable British demands had thrown into doubt an agreement on a transition period.



Speaking in Brussels after the latest round of talks, Barnier told reporters he had been left mystified by the positions taken by Downing Street in recent days. “To be quite frank, if these disagreements persist, the transition is not a given,” Barnier said.

The comments triggered an immediate plunge in the value of the pound, a reflection of the importance of a transition period in cushioning businesses in the UK from the effects of Brexit after 29 March 2019. During the envisioned 21-month transition, the UK would in effect stay in the EU, and under its laws, but lose its seat in its decision-making institutions.

However, No 10 wants to treat EU citizens arriving in the UK during the transition period differently from those already living in the country. The UK is also seeking a right to object to the application of new EU laws, something fiercely opposed by member states, including France and Germany.

Barnier said he was “surprised” by the UK’s demands and suggested that unless Downing Street gave way the differences between the two sides could be insurmountable.



Quick guide What are Brexit options now? Four scenarios Show Hide Staying in the single market and customs union The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election. The Norway model Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules. The Canada deal A comprehensive trade deal like the one handed to Canada would help British traders, as it would lower or eliminate tariffs. But there would be little on offer for the UK services industry. It is a bad outcome for financial services. Such a deal would leave Britain free to diverge from EU rules and regulations but that in turn would lead to border checks and the rise of other “non-tariff barriers” to trade. It would leave Britain free to forge new trade deals with other nations. Many in Brussels see this as a likely outcome, based on Theresa May’s direction so far. No deal Britain leaves with no trade deal, meaning that all trade is governed by World Trade Organization rules. Tariffs would be high, queues at the border long and the Irish border issue severe. In the short term, British aircraft might be unable to fly to some European destinations. The UK would quickly need to establish bilateral agreements to deal with the consequences, but the country would be free to take whatever future direction it wishes. It may need to deregulate to attract international business – a very different future and a lot of disruption.

“When I met David Davis in London on Monday and once again in negotiations in Brussels this week, the UK insisted that we should reach an agreement in March on this transition period,” Barnier said. “At the same time, however, our partners set out a certain number of disagreements which I regard as substantial.

“I don’t understand some of the positions of the UK … I am surprised by these disagreements. The positions of the EU are very logical … If these disagreements persist, there will undoubtedly be a problem.”

Facebook Twitter Pinterest David Davis: ‘It is surprising to hear that Michel Barnier is unclear on the UK’s position in relation to the implementation period.’ Photograph: Steve Parsons/AFP/Getty Images

Davis, who had not joined Barnier for the usual joint press conference at the end of a negotiating round, later said there was a “fundamental contradiction” in the EU’s approach. “Given the intense work that has taken place this week, it is surprising to hear that Michel Barnier is unclear on the UK’s position in relation to the implementation period.”

The Brexit secretary acknowledged that “for any such period to work, both sides will need a way to resolve disputes in the unlikely event that they occur … But there is a fundamental contradiction in the approach the commission is taking.”



With reference to a clause in the EU’s terms for the transition period, allowing Brussels to sanction the UK for infringing EU law, Davis added: “Today they acknowledged that a way to resolve disputes and infringements is needed. Yet at the same time they dismissed the UK’s push for reasonable safeguards to ensure our interests are protected. It is not possible to have it both ways.”

The shadow Brexit secretary, Keir Starmer, described Barnier’s comments as a “wake-up call”.



Q&A What is regulatory alignment? Show Hide Inside the EU, both Ireland and Northern Ireland (as part of the UK) are part of the single market and customs union so share the same regulations and standards. The only way to avoid a hardening of the border after Brexit is to ensure regulations and standards on both sides remain more or less the same in areas like food, medicines and so on. This might imply a permanent acceptance of EU rules – something that would be anathema to hardline UK Brexiters and the DUP, who reject anything that would "decouple" the North from the UK. David Davis told parliament that regulatory alignment would not mean adopting exactly the same rules as the EU but "mutually recognised" rules and inspections. However, an official in Brussels countered that regulatory alignment would mean that the UK would have to implement rules from Brussels without having any influence over them. What is the government’s plan for ‘regulatory alignment’?

Davis says the UK could continue to follow some rules of the EU’s single market. This would help avoid a hard border, but would also limit the UK’s ability to diverge from EU regulations. What does the EU think?

Davis thinks the UK and EU can agree to meet the same aims, while achieving them in different ways. The EU believes this could see its standards on workers’ rights and the environment undercut. Can it even work?

Parliament cannot bind its successors. This principle would mean a deal would never be completely secure for more than five years – putting its feasibility in doubt. Photograph: PA

Jacob Rees-Mogg, chair of the pro-hard Brexit ERG group, said: “I would be happy to move to WTO terms without a transition and save £39bn that could be spent on the NHS. It is rather feeble as threats go.”

Responding to comments from Davis on Thursday that the EU had been “discourteous” in including a punishment clause in its terms for a transition period, giving it the ability to sanction the UK if it infringed EU laws, Barnier said: “My attitude has not been in the least discourteous. It is totally foreign to my state of mind … I don’t really understand why there was this reaction, this uproar.”

Play Video 1:00 Michel Barnier: Irish border checks 'unavoidable' under Brexit – video

He confirmed the Guardian’s report that under the draft withdrawal agreement Northern Ireland would in effect stay in the single market and customs union where relevant to the north-south economy and Good Friday agreement.

Barnier said there was no possibility of a trade deal that could avoid barriers to trade, and that the UK had not yet offered any “specific solutions” to avoid a hard border. Regulatory alignment between the EU and Northern Ireland had been accepted by the UK as the default position, he said. “We are working with the UK on this full alignment. We will be working on those matters in the next few weeks.”

Barnier’s officials were forced on the defensive over the sanction clause, which some member states felt was too aggressive. “It was clearly a surprise and it created communication problems, so why was it there?” asked one diplomat following a Brexit meeting of the EU’s 27 members with the commission.

Nine countries reportedly called for more clarity about the commission’s ideas for resolving disputes with the UK during the transition period. Others were more supportive. “If we can’t enforce our agreement, it’s worth nothing,” said a second diplomat. The EU needed to be able “to ensure enforcement quickly and nimbly” in the coming period “as we do not know what follows”, the source said.