James Forsyth James Forsyth

The spectre of no deal is receding – probably

Over the summer, a no-deal Brexit became less likely. Eurosceptic ultras have been forced to be less blasé. The return of Steve Baker to the European Research Group, the lead Brexiteer bloc of MPs, has injected more realism into their discussions on the subject. Baker was involved with no-deal planning in government and has made clear to colleagues that it would present significant challenges.

Those intimately involved in the negotiations on the British side say that the EU is also more concerned about the talks failing. As deadlines approach, the focus is on the sheer logistical complexities that would come with Britain crashing out of the European Union. Senior figures on the EU side are alarmed at the challenge of helping Ireland through a hostile no deal. The European Central Bank’s discussions with the Bank of England have been a reminder of the close relationship between the eurozone and the City of London.

One of the EU’s priorities has been to prevent any alternative economic model emerging in Europe. A no-deal Brexit would almost certainly do that. Britain would either opt for the Corbynite approach of heavily subsidised industry or try to turn itself into a western Singapore, in a bid to regain competitiveness. Both would damage the EU’s interests.

Despite this concern, there have been no breakthroughs in the negotiations. I am told that the UK government is ‘by no means there yet’ when it comes to persuading the EU member states to change Michel Barnier’s negotiating position. Barnier is arguing with ever greater ferocity against Theresa May’s Chequers proposal.

Not all member states share Barnier’s hostility towards Chequers. Some are even interested in what it proposes. But there is nowhere near the kind of momentum behind May’s proposals that would lead to the EU being prepared to break up the single market in the way that Chequers envisages.

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