Barnier: Leaving customs union will cause barriers to trade

Brexit impact studies show north east and west midlands will sustain biggest hit

Downing Street says Britain is "categorically" leaving the customs union post-Brexit - a statement viewed alternately as a salve to calm backbenchers over UK-EU ties, or as a red flag for Tory mutineers.

Mr Barnier is visiting London for talks with Mrs May and Brexit Secretary David Davis.

March 30 - If current plans work, Britain will start a transition period, during which it will effectively maintain all its benefits in terms of access to European Union markets, and be bound by all European Union rules and budgets, while losing its vote.

But he added: "The conditions are clear, very clear".

Approximately 40 European Union directives could be imposed on Britain in the two-year transition period post-Brexit, according to a leaked Whitehall report.

Britain, Davis said, wants a comprehensive free trade agreement and a customs agreement to make trade as frictionless as possible while being free to strike free trade deals with swiftly growing countries across the world.

The proposals have angered backbench Tories, however, who are campaigning for a complete break from Europe, so that that the United Kingdom is free to strike wide-ranging trade deals with other nations.

"We will be leaving the EU and the customs union and it is not government policy to be members of "the" customs union or "a" customs union", the government spokesperson said.

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Meanwhile, Senior Tory backbencher Bernard Jenkin launched a fresh attack on Chancellor Philip Hammond, accusing him of pursing his own policy and "formenting confusion" by claiming the UK's relationship with the European Union might only change "very modestly" after Brexit.

He met May at Downing Street before his official talks with Davis, following which he told reporters that the two sides had agreed to move on to the next phase of Brexit negotiations.

The Prime Minister is facing unrest on the Tory benches - and renewed speculation of moves to oust her - over her refusal to stake out a clearer position on the eventual deal.

A spokesperson for the prime minister added on Monday that the government was instead looking at agreeing either a "highly streamlined customs arrangement" or "a new customs partnership" with the EU.

Unless Britain negotiates a new trade deal with the EU, its exports would run into the union's external tariffs, which average about 5 percent across all goods, including 10 percent for cars and over 200 percent on certain types of poultry.

But business leaders have urged the Government to remain in a customs union and Tory Brexit rebel Anna Soubry urged Number 10 to "do the maths" and listen to company bosses. "But at the moment it's absolutely right that we give her all the support we can in getting a good deal". "It is not our policy to stay in a customs union". "It's not a matter of scaremongering to get negotiating advantage", he said. People will be free to live and work here. That's the question MPs will be asking themselves when the Prime Minister finally shows her hand.

And ministers have said the demand exceeds what was agreed at December's summit in Brussels.

Europe's Chief Negotiator, like all of us, wants an end to the fudging, dodging and u-turning: "it is time for the Government to decide what it wants".

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