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The big picture

With talks on the all-important future UK-EU trade deal due to start in March once a transition deal is agreed, Britain is embarking on a charm offensive. Phase one: send the Brexit secretary, David Davis, and the chancellor, Philip Hammond, to Germany.

The pair first tried charm, promising that Britain would continue to support European security and fully realised it could not have its cake and eat it when it comes to the single market.



Then they tried offending, saying the EU’s refusal to contemplate a trade deal that includes services – and specifically financial services – risked disaster for Europe’s banking sector should anything like the 2008 crash recur.

“They’re asking Germany to wreck the single market that made Germany rich,” noted one Eurocrat, Chris Kendall, “by carving out an exception for financial services to stop them relocating to Germany.”

Worse: “Their argument is that there will be another crisis unless the banks that caused it stay in the country where the crisis started.”

Hammond subsequently complained in interviews that EU leaders had no good ideas for the future relationship and called their approach “backward-looking” and marked by “paranoia” and a desire to “punish” the UK.

As charm offensives go, it was not an immediate success. As Dieter Kempf, president of the Federation of German Industries, acidly observed:

I was surprised to hear it was now up to the EU to make an offer to the UK on how to deal with the UK in future. I understand you don’t want to be like Norway or Switzerland, or an agreement like the one with Canada. But for God’s sake, give us a bit of an idea of what you do want.

Also last week, Nigel Farage, the former Ukip leader, caused much excitement – particularly among remainers, including Nick Clegg, Andrew Adonis and Chuka Umunna – by saying that “maybe, just maybe” there should be a second referendum.

He later backtracked, saying “of course” he did not actually want a second vote, but leave supporters should clearly “face this potential threat” and start organising for it. Pro-leave Tories suggested Farage was headline-hunting.

The view from Europe

As the UK turns on the charm (or at least, tries to), the EU is turning up the volume, writing to companies in fields from development to pharma, fisheries, aviation and haulage to warn a no-deal Brexit would prevent them operating across the continent.

Across a wide range of sectors, the European commission made clear that unless a deal is agreed by October, giving parliaments time to ratify it, the status quo will come to an abrupt end: the UK will become a “third country” on 30 March 2019.

The letters appear to be what prompted Davis to write to the prime minister, Theresa May, to complain that British economic interests were being damaged by the bloc’s preparations for a possible no-deal Brexit.

In a leaked letter, Davis said the warnings might encourage UK-based entities to relocate to the continent. Perhaps unsurprisingly, this too went down a storm, with many pointing out that the government had spent much of the past year arguing “no deal is better than a bad deal”.



A commission spokesman said Brussels was “surprised that the UK is surprised that we are preparing for a scenario announced by the UK government itself”.

Meanwhile, back in Westminster

With the Tories finishing a reshuffle and Ukip debating a fourth leadership contest in 16 months, most of the political manoeuvring this week was from Labour, with an increasingly vocal group of backbenchers urging Jeremy Corbyn to back continued membership of the single market and the customs union.

First came the Ilford North MP, Wes Streeting, who used the Fabian conference to argue that Labour represented, at present, “the single biggest barrier” to the UK staying in the both.

Next came the shadow Northern Ireland secretary (and one-time Corbyn challenger) Owen Smith, who told the Guardian that the only way to avoid a hard Irish border would be to stay in some sort of single market and customs union.



If Corbyn didn’t get the message, on Monday, a series of remain-minded Labour MPs, Umunna, Chris Leslie and Stephen Doughty, met the EU’s chief negotiator, Michel Barnier, in Brussels.

Will this make any difference to Labour’s official Brexit policy of what might be called careful ambiguity? Seemingly not, or at least not yet.

On Sunday, Corbyn appeared on ITV’s Peston show, where he repeated his much-disputed assertion that it is “not possible” to remain inside the single market without being a member of the EU, and that Britain should remain in “a customs union” after Brexit – if not the customs union. Hopefully that’s all clear now.

You should also know

Read these

In the Guardian Phil McDuff argues that a second Brexit referendum would be even more toxic and divisive than the first since, because those who voted to leave the first time have been given no reason to change their minds.

In the New Statesman, James McGrory says the biggest risk to Britain’s economic prosperity does not come from anything the Germans, the French, the Slovenes or any of the other EU member states might do, but from David Davis.

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