The City’s patience over the government’s handling of Brexit is wearing thin, as a breakthrough in Brexit talks seems as far away as ever.
There was no end to the deadlock on the Irish border proposal today, despite a “constructive” phone call between Theresa May and Arlene Foster, leader of power-brokers the DUP. The unionist party scuppered a deal at the last minute when it rejected the proposed “regulatory alignment” solution over fears it will push Northern Ireland away from the rest of the UK – despite later assurances it would apply to the whole country.
May now has just two days to get her ducks in a row before Brussels’ deadline. Although the European Council will not take place until the end of next week, City A.M. understands the EU expects an offer before this weekend – any overtures made at the Council meeting itself will not be countenanced, one insider said.
But the pressure is piling on the Prime Minister from the City too.
During this evening's annual dinner at the Haberdasher’s Hall, Paul Drechsler, president of the Confederation of British Industry, said the second phase of talks must be unlocked next week or else “60 per cent of firms with contingency plans” will begin acting on them.
“That means jobs leaving the UK – in most cases irreversibly,” he said. “There’s no time to waste. In the immediate term, business needs to know the details of any transition deal – Rome is burning on that issue.”
At the same event City of London Corporation’s policy chief Catherine McGuinness warned:"The status of London has diminished in the eyes of our partners and competitors, and we now have a case to prove.”
McGuinness highlighted the City of London's recent tax report that showed the financial services sector had contributed £72bn in tax last year – 11 per cent of the government's total tax take, and more than the reported divorce bill of £50bn.
"Not getting the right deal – or getting no deal – puts this at risk," she added.
Earlier in the day McGuinness had said she was “bewildered” by the Brexit secretary David Davis’ admission that government had not carried out any sectoral impact assessments.
“While they might not have done their own research, City figures produced last year showed a worrying picture," she said. "This was that a bad deal in the negotiations could mean up to 75,000 jobs being lost and a fall of up to £10bn in tax revenues.”
This morning, Davis had breezily confessed no impact assessments had been carried out because he was “not a fan” of economic models and in this instance their value would have been “near zero”. He insisted we would "only know how much tax revenue the UK will lose from the City when the final form of Brexit is known".
Davis also told the committee that no formal assessment of leaving the customs union had been taken.
"We took a judgement," Davis said.
"Isn't that quite extraordinary?" asked a surprised Brexit committee chair Hilary Benn. An unruffled Davis replied: "No, no."
The minister’s untroubled admission was echoed by chancellor Philip Hammond later in the afternoon, who told the Treasury select committee that the cabinet has not yet had "specific" discussions of what the "end state" would look like.
“Logically that will happen once we have confirmation that we have reached “sufficient progress” and are going to begin the phase two process with the European Union.
We are not yet at that stage and it would have been premature to have that discussion before we reach that stage,” he said.
Both ministers were slammed by MPs for their disclosures. Alison McGovern said Hammond revealed a government that was “breathtakingly dysfunctional”. Several MPs including Chuka Umunna and Wera Hobhouse questioned whether Davis had misled parliament, while Pete Wishart questioned if he was in contempt.