Senior Tories Eye Brexit Compromise

After eight hours of crisis talks at Chequers on Thursday (22 February) it emerged factions within Prime Minister Theresa May's cabinet are proposing a free trade agreement similar to the EU-Canada deal, according to the FT.

However, it is understood the proposals would seek to improve upon Canada's deal with the bloc by securing better access to the single market for goods and services via regulatory cooperation.

Brexit enthusiasts within the cabinet said the UK should be able to set its own rules and regulations, allowing an "ambitious managed divergence" with the EU over time.

But Remainers, led by Chancellor Philip Hammond, said the UK required high levels of alignment with the EU, with some sectors maintaining identical regulations.

Health secretary Jeremy Hunt told the BBC Today programme: "There will be areas and sectors of industry where we agree to align our industry with European regulations."

He added it would be key for this to be done "on a voluntary basis" and the UK would reserve the right to diverge in the future.

FT sources said a formal declaration committed to high standards in areas such as employment law, the environment and consumer protection, to preserve a level playing field, would be made by the UK.

Meanwhile, the EU and UK would agree common regulatory goals, but would be free to achieve those goals in different ways.

The "right to diverge" would be controlled by a "dispute resolution mechanism", imposing sanctions if either side tried to undercut the other in regulatory standards. This would ensure mutual recognition of each other's rules and regulators.

Brexit blog: Industry reaction as investors gear up for negotiations outcome

It will come as good news to industry voices, speaking at Funds Congress 2018 earlier in February, who backed a system of mutual regulatory recognition (MRR) in financial services post-Brexit.

CEO of TheCityUK Miles Celic said MRR is a "mutually beneficial solution" for the UK and Europe, as jobs that leave the UK - if the country does not get a deal that works - are unlikely to go to EU. Instead, they could move to New York and Asia, thereby hitting Europe's total financial workforce and expertise.  

Meanwhile, opponents of Brexit are preparing a major campaign they believe has close to a 50:50 chance of stopping the UK's exit from the EU, by blocking May's divorce deal, according to Reuters.

The George Soros-backed ‘Best for Britain' campaign group hopes to convince parliament to block the withdrawal deal May aims to bring back from Brussels in October.

The group's chief executive officer, Eloise Todd said: "Brexit can be stopped if people want it to be stopped… it is absolutely not over yet."

Todd and other campaigners hope to trigger a rerun of the June 2016 EU referendum, offering voters the option of leaving on the terms of May's deal or staying in a reformed EU.