Member Article

Hard Brexit the only option according to Tusk, as US banks poised to flee

President of the European Council, Donald Tusk, has poured scorn on Boris Johnson’s suggestion that Britain can negotiate a better settlement with the EU by claiming the country faces the prospect of either ‘Hard Brexit or no Brexit’.

The remarks, which were delivered to Brussels policymakers on Thursday, are likely to spook the markets further after the government’s muddled pronouncements on Brexit negotiations in recent weeks have caused the value of the pound to sink.

Riffing on Johnson’s claims that Britain could have its cake and eat it in its renegotiation with the European bloc, Tusk said: “That was pure illusion, that one can have the EU cake and eat it too.

“To all who believe in it, I propose a simple experiment. Buy a cake, eat it, and see if it is still there on the plate.”

Earlier in the day, the Foreign Secretary had told MPs in a foreign affairs select committee that the government planned to seal a deal ‘which is of huge value and possibly of greater value’ than the current arrangement, suggesting that there was the possibility of negotiating a softer exit that retained access to the single market,

However, Tusk’s speech, coming so soon after Johnson’s claims, has seemingly nixed any possibility of that happening and hints at the increasingly hardline stance in Brussels.

Tusk added: “The only real alternative to a hard Brexit is no Brexit, even if today hardly anyone believes in such a possibility.”

In a further sign that sentiment on the continent is hardening, the French finance minister, Michel Sapin, has also claimed that a number of US banks are ready to relocate some of their activities from the City of London to the continent.

According to the minister, who visited Washington last week, were the government to go down the hard Brexit route then it would be inevitable that some or all functions at American financial institutions based in London would have to be moved to other European capitals.

He said: “For them, until now, the question was ‘will Brexit take place? Will it really be implemented? You talk about two years but maybe it will last three or four years? That’s over now, there’s no more of that.”

Sapin also intimidated that banks have told him personally that plans are already afoot for US banks to relocate, and said some were already set on the fact that ‘activities will be transferred to the continent’ in the near future’.

“Those are their words, not mine,” he added.