EU capitals weigh tougher response to UK’s Brexit ‘provocations’

EU governments are exploring ways of pressing the UK to comply with its post-Brexit obligations as they resign themselves to an increasingly combative relationship with Britain.

Brussels is already preparing legal action against the UK over its shock announcement earlier this month that it would unilaterally extend grace periods that ease the impact of Brexit red tape on Northern Irish businesses — a step attacked by the EU as a breach of good faith.

Some capitals have held informal talks on further options for retaliation if relations with Britain continue to deteriorate, according to diplomats.

“We had hoped to maintain a trustful partnership,” said one senior EU diplomat. “Now it looks like it is going to be quite a tough and rough relationship for the foreseeable future.”

The ideas being floated include potentially denying the UK sought-after membership of a European legal co-operation pact, diplomats said, as well as further stalling EU decisions on market access for the City of London, in response to what the bloc sees as a number of UK provocations. 

The latest row over Northern Ireland comes on top of an already difficult start to the real post-Brexit era, with Britain now fully outside of the bloc and its single market.

EU governments have been irked by the behaviour of Lord David Frost, the UK’s new Brexit minister, who blindsided Brussels over Northern Ireland and then called on the EU to “shake off any remaining ill will towards us for leaving”. Britain insists that its actions respect its commitments to the EU.

The UK government has refused to give full diplomatic credentials to the bloc’s representative in London, João Vale de Almeida, who, in a meeting with Westminster journalists on Thursday, called for a truce in the cross-channel sniping. 

“This is a special relationship,” Vale de Almeida said. “We need to make an effort to change the mindset and give up on trying to score points on disputes of the past.”

Given the one- to two-year timeframe for EU legal action to run its course, EU diplomats said that informal discussions had already taken place among some member states on a broader strategy for managing a more difficult new relationship than expected.

“If the UK is not willing to make this relationship work and is seeking to stretch the fabric [of its agreements] as much as possible, we might need to resort to other options,” said one EU diplomat, who stressed that no formal proposals had been tabled at this stage.

“Hope is fading that the relationship is going to be very successful in the short to medium term . . . The question is how do we prepare ourselves for that,” the diplomat added.

Options floated include rejecting the UK’s request to sign up to the Lugano Convention, an international pact that ensures that a country’s civil and commercial court judgments are recognised abroad. 

Britain applied to join last April and the contracting parties — the EU, Denmark in its own right, Iceland, Norway and Switzerland — have a year to make a decision, which must be unanimous. 

Another idea discussed is to put on ice any decision on whether the UK should be granted so-called “equivalence rights” that make it easier for its financial services sector to serve European clients. 

Brussels last year dashed City of London hopes that equivalence rights would be in place in time for the end of the UK’s post-Brexit transition period, on January 1, when the country left the single market.

Granting equivalence to the UK for a range of financial markets activities would make it easier for banks and fund managers in Britain and the EU to discuss deals and trade across borders.

Other areas that have come up in these discussions include UK access to the EU energy market and handling of commercial data, although officials pointed out that both these areas needed to be treated with care because of potential legal complications or the risk of damage to EU interests.

“Governments are really fed up with the constant provocations. The personality of David Frost certainly doesn’t help,” said the senior EU diplomat. “If this continues, there will be a response.”

Additional reporting by Philip Stafford in London