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European Union wants Brexit transition to end December 2020
21 December 2017, 12:40 | Tara Lloyd
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Once agreed, negotiations can then move on to future relations for the longer term, with Britain hoping to complete a trade deal as early as possible.
The Cabinet did not discuss the position set out so far by the European Commission's chief negotiator, Michel Barnier, whose vision of a free trade agreement similar to that struck with Canada in 2016 differs sharply from Mrs May's demand for a bespoke United Kingdom deal delivering a "deep and special partnership".
The European Commission said on Wednesday that a Brexit transition period during which Britain must obey EU rules should last until the end of 2020.
Barnier appeared to throw the Brexiteers a bone on one of their key issues, however, saying that while Britain would be excluded from talks on fishing quotas during the transition, there would be "specific procedural arrangements" to give it a voice.
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He said that the deadline of December 31, 2020 was "logical" as it would avoid the complications derived from the United Kingdom still being subject to the bloc's rules and obligations once the EU's next multi-annual budget kicks in on January 1, 2021, Efe news reported.
The guidelines make clear the Commission expects the United Kingdom to continue to observe European Union rules and regulations during the transition while having no say over them.
International Monetary Fund chief Christine Lagarde said in London on Wednesday that Britain's economy was "losing out" as a result of last year's vote to leave the European Union, but that any post-Brexit trade deal could help ease the pain.
May suffered a humiliating defeat by pro-European members of her own Conservative party last week, when MPs voted to amend the bill to ensure parliament has the final say on any divorce deal with Brussels.
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In response to Barnier's warnings to the City, Carney said: "I don't accept the argument that just because it hasn't been done in the past, it can't be done in the future".
The cut-off date for the transition phase is contained in the EU's guidelines for the next phase of Brexit negotiations.
Leading conservative lawmaker Jacob Rees-Mogg slammed this demand as "rather hostile", leaving the United Kingdom "no more than a vassal state, a colony, a serf of the European Union".
"There is no place" for giving Britain's financial services full access to the European Union market, he told a number of newspapers, including Britain's The Guardian.
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