EU Heavyweights Will Block U.K. Single-Market Bid, Spain Says

(Bloomberg) -- The European Union’s biggest countries will block any U.K. attempt to combine single market membership with immigration curbs, Spain’s foreign minister said, piling further pressure on Prime Minister Theresa May as she seeks to finalize her vision for the country’s post-Brexit ties with Europe.

Some smaller European countries would accept a fudge but the most powerful ones, including Germany, France and Spain, won’t allow it, Josep Borrell said in an interview in Luxembourg Tuesday. He was speaking as May prepares to give more detail on her Brexit objectives -- potentially including membership of the single market for goods -- with businesses warning about loss of access to European markets.

“Germany will say no, France will say no, Spain will say no,” said Borrell, part of a Socialist government that swept to power in Madrid this month. Europe’s largest countries “are quite angry with the United Kingdom -- all this mess, all the trouble created, all this time wasted,” he added.

Borrell’s comments, to Bloomberg News and two European news websites, reflect growing alarm among the EU’s Brexit negotiators that the U.K. thinks it can carve out a deal for membership of the single market in goods, while going it alone in the area of services, an EU official said. The EU will stick to its position that the U.K. can’t cherrypick the parts of the single market it likes, the official said.

Single-Market Fudge

May’s cabinet is still deciding exactly what sort of economic relationship it wants with the EU after Brexit, and while staying in the a single market for goods isn’t yet an official position, EU officials say the U.K. has raised it informally in Brussels. After an EU summit this week, May is heading to her Chequers country retreat with ministers to thrash out the basis for a white paper on the post-Brexit relationship to be published in July.

Staying in the single market for goods only would allow the U.K. to strike trade deals around the world in services -- a key attraction for pro-Brexit members of May’s cabinet -- yet at the same time avoid checks at borders between Britain and the EU. It would also solve the tricky problem of how to avoid slowing trade across the Irish border, something both sides have said must be part of a final deal.

Since negotiations began, the EU has insisted that the U.K. can’t retain membership of the single market if it wants to control the movement of European citizens.

This EU position has been questioned by some of the remaining 27 governments, with some countries, particularly in eastern Europe, signaling that they may be willing to accept a compromise, a second EU official said.

Gibraltar

But they don’t have the support of the the biggest countries, which call the shots, or the European Commission, which is handling negotiations on the EU’s behalf.

“There are many European countries who would support the United Kingdom in that because they are against free movement of people,” Borrell said. “They won’t win that battle.”

Separately, the British and Spanish governments must come to a deal if the Brexit agreement, including the 21-month transition period, can apply to Gibraltar, the tiny British territory on Spain’s southern tip that is also claimed by Madrid.

“Gibraltar is not a problem, we’re not going to ask to put the Spanish flag on Gibraltar,” Borrell said. He said the new Spanish government wants an agreement that protects the interests of the people living around Gibraltar, with safeguards to stop it being a tax haven.

“Brexit is not a political problem but it is a pain in the ass,” he said.

--With assistance from Esteban Duarte.

To contact the reporter on this story: Ian Wishart in Brussels at iwishart@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Ben Sills, Jones Hayden

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