Germany: no punishment for UK, but EU exit good for no one

Failure to reach Brexit deal would be very bad for Britain warns Chancellor

David Davis, left, and Michel Barnier arrive for the start of Brexit negotiations in Brussels, Belgium, on Monday, June 19, 2017.

Davis mentioned recent terrorist attacks that he said drew Britain and the European Union closer.

"To that end we are starting this negotiation in a positive and constructive tone, determined to build a strong and special partnership between ourselves and our European allies and friends for the future", he said.

Barnier was less warm as he welcomed Davis.

He identified the need to "tackle the uncertainties caused by Brexit first for citizens, but also for the beneficiaries of the European Union policies and for the impact on borders, in particular Ireland", as one of the negotiations' objectives.

Speaking in Luxembourg Friday before a meeting of European Union finance ministers, Hammond said, according to Reuters, "My clear view, and I believe the view of the majority of people in Britain, is that we should prioritize protecting jobs, protecting economic growth, protecting prosperity as we enter those negotiations and take them forward". He said he hoped for a "soft Brexit", which would leave many trade and immigration ties in place.

If no exit agreement is reached by March 2019, Britain will face the prospect of trading under higher tariffs and more red tape.

The issues at stake are daunting.

The talks will initially focus on three areas insisted on by the EU - Britain's Brexit bill, estimated at around 100 billion euros (Rs 7,200 billion), the rights of three million EU nationals living in Britain and one million Britons on the continent, and the status of the border between Northern Ireland and Ireland.

The move backfired, May lost her Conservative majority in the vote and has been fending off critics of her leadership ever since.

Meanwhile, Foreign Secretary Boris Johnson appeared to muddy the waters within his own party by backing Scottish Tory leader Ruth Davidson's call for an "Open Brexit", but aligning it more to a hard rather than soft outcome.

UK Chancellor of the Exchequer Philip Hammond said on Sunday he wanted a "jobs first" Brexit - a hint that he believes economic concerns should be prioritized over the political demand to cut immigration from the EU.

"The question is not whether we are leaving the customs union, the question is what do we put in its place in order to deliver the objectives which the prime minister set out", he told the BBC's Andrew Marr show.

Business leaders are concerned about the government's stated position that "no deal is better than a bad deal" for Brexit.

William Dartmouth MEP, the UKIP Trade spokesman, said: "The European Union, and the Quislings on the British side, have every incentive to delay these "negotiations" as much and as long as possible, in the hope of seeing the Referendum decision set-aside, or arriving at a "deal" whereby the United Kingdom leaves in the EU in name but not in substance". But the timing could hardly be more problematic for a change in May's original plan, only days before talks are to begin with the European Union and amid signs of frustration in Brussels at the political turmoil in London.

"Nothing is agreed until everything is agreed", he said, using a line also expressed by the EU. He said once there was sufficient progress on those, the talks would start looking at the EU's new relationship with Britain. Business leaders say the uncertainty means they are having to plan on the assumption that Britain leaves without a proper deal. One European diplomat in London said the political upheaval was such that it was hard to know what to write back to his capital, pouring scorn on May's campaign slogan of "strong and stable leadership".

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