Press

Simon Tilford, deputy director at the Centre for European Reform, a pro-EU think-tank, said that taking a hard line with Britain despite the size of its market reflected European concerns that Brexit posed an existential threat to the EU.

“If Britain could leave but retain the advantages of membership, what would prevent other Eurosceptic countries from pushing for similar deals? Like France and Italy, Germany is desperate to avoid setting a precedent that emboldens Eurosceptic movements in other countries,” he said.

However, as was pointed out here only last week, citing analysis published by the Centre for European Reform, if growth is calculated with reference to what things cost in each county and what the money can actually buy, then the UK is behind Germany, Spain and France among the European countries, to say nothing of those G7 counties across the Atlantic — the USA and Canada.

Hammond seems to have a well-read advisory team. This bit of the speech seemed to have been written in direct response to Simon Tilford’s pamphlet on Britain’s mediocre economy, published last week (picked up in Free Lunch and later by Martin Wolf). Hammond pointed out that labour productivity in Britain is worse not just than that of the US and Germany, but also France and Italy. He pointed out that changing this requires greater investment in infrastructure and skills. And he highlighted the large disparity in prosperity between different regions of the UK. It was as if he was ticking boxes set out by Tilford, since these were the main headings in the pamphlet.

Charles Grant, of the Centre for European Reform, says the reason the EU is taking such a tough stance — not only rejecting pre-negotiation but also insisting that the UK cannot have the single market without freedom of movement — is fear of populism.

Charles Grant, the director of the Centre for European Reform, has published a paper in which he reveals that negotiators in other countries including France and Germany are preparing to stand their ground in Brexit negotiations. They believe freedom of movement is a central part of the single market and are reluctant to make concessions in other areas. "She is trying to square a circle and none of us know how she plans to do it, but British companies will not be in the single market if she limits immigration and spurns or rejects ECJ rulings," said Grant.

The possibility that Deutsche could run short of capital if it is overwhelmed by penalties puts Berlin in a more vulnerable position than before, possibly undermining any push for a tough solution for Italy. "They have taken a very doctrinaire line with the Italians," said Simon Tilford of the Centre for European Reform, a London-based think-tank. "Maybe this gives Germany cover to soften their line."