Press

Sam Lowe, trade expert at the Centre for European Reform, offered a snap judgment: “I totally don’t get it.”

The EU may have once thought about including financial services in trade deals but won't do for the Brits. It's time for the UK to get real give hopes on "mutual recognition", writes Samuel Lowe at the Centre for European Reform: "Behind closed doors, member-state representatives say that comprehensive mutual recognition is not something an FTA can allow in and of itself. It would also require the EU to change many of its laws, which only provide certain rights to financial institutions incorporated within the territories of member-states of the EU and the European Economic Area. In itself, this would not be an impossible hurdle to clear, but it would require the will to offer mutual recognition in the first place, which is currently absent on the continent."

In Rome, the EU is dealing with eurosceptic forces. "This will not be the case whatever happens in Spain," pointed out Camino Mortera-Martinez from the Centre for European Reform think-tank. Mortera-Martinez noted that the main cause of instability in Spain remained the Catalonia crisis and that market uncertainties could end up playing into Rajoy's hands by making Spanish MPs and people wary of creating even more volatility.

With Brexit talks going through one of its rougher patches (and it will no doubt get worse before next month’s European Council), observers may want to keep their eyes on the horizon to avoid getting bogged down in short-term diversions. And what is emerging out of the distant haze is that the UK may end up seeking a long-term relationship with the EU based on a customs union and accepting single market rules and jurisdiction for the production and trade in fish, agricultural and industrial goods but not services. Over the past few months, the logic of such a model has been outlined here and in briefings by the Centre for European Reform.

"Beyond the price of the certificate itself you also need to be absolutely certain the product you are exporting actually meets the criteria set out in any given trade agreement," says Sam Lowe, a trade expert at the Centre for European Reform. "Sometimes proving origin is easy, but sometimes it is not and doing so requires paying for specialist help, which doesn't come cheap."

“The new Italian government will give Germany every excuse not to do what Macron would like and it will destabilize the markets,” said Charles Grant, director of the Centre for European Reform, a research institution. “It will increase the risk of another eurozone banking crisis, not reduce it.”