Personally, I continue to think it more likely than not that something will be hammered out over the next several months, and that when it is, it will be trumpeted by both sides as a triumph – a win, win for all.
I doubt the reality will match the rhetoric. The EU is in no mood for favours. Britain’s level of access to the single market will be dictated not by what is economically best for both parties, but by the UK’s willingness or otherwise to agree level playing field terms on labour rights, the environment, and state aid, as well as reciprocal rights on fisheries.
Whatever the outcome, much more stringent customs procedures together with dual product certification procedures – one for the EU and one for Britain – are bound to have some adverse effect on trade.
As for financial services, UK negotiators seem to have given up on the “enhanced equivalence” they once sought and resigned themselves to the EU retaining complete control over the equivalence regime. The City will no doubt find a way; it generally does. But for European markets, its position will be rendered suboptimal, and it will be damaged accordingly.
All the same, some sort of a deal should begin to take shape over the month ahead. If the two big sticking points are state aid and fisheries, it ought to be possible to trade one against the other. For the UK, state aid is most obviously the issue on which concessions can be made. The EU after all no longer demands that Britain remains subservient to its own regime; only that it sets up something similar.
Yet either deliberately or because advisers don’t really know what they want, no proposals have yet been published, and that’s what is causing the problem. If essentially much the same as the EU regime, so that there is no obvious attempt to gain competitive advantage through state subsidy, then it shouldn’t be much of an issue.