The only alternative to hard Brexit is no Brexit, says Donald Tusk

The only alternative to hard Brexit - a complete break from the EU and membership of the single market - is no Brexit, the European Council president said on Thursday.

Speaking in Brussels, Donald Tusk warned that the EU would not compromise on the free movement of people and balked at suggestions that Britain could remain a member of the single market and curb EU migration.

“In my opinion the only real alternative to a hard Brexit is no Brexit, even if today anyone hardly believes in such a possibility.”

Prime Minister Theresa May indicated at the conservative party conference in early October that the government would seek a hard break from the EU and would trigger Article 50 to start formal negotiations by the end of March 2017.

The response from the market was pronounced as the pound fell to near 30-year lows against the dollar.

London’s financial centre is concerned about passporting rights from the single market which allows financial institutions to conduct business through a single licence.

Tusk referenced foreign secretary Boris Johnson’s remarks that Britain would have “the EU cake and eat it too” about being part of the single market without bearing any of the costs, notably adhering to the free movement of people.

He said: “The brutal truth is that Brexit will be a loss for all of us. There will be no cakes on the table for anyone, there will only be salt and vinegar.”

He added that it was “useless to speculate about soft Brexit”.

Tusk said negotiations will be conducted in “good faith” while defending the interests of the remaining 27 EU members and minimising costs to seek the best deal for everyone.

However, he maintained “I am afraid that no such outcome exist that will benefit either side.

“Of course it is and can only be the UK to assess the outcome of the negotiations and determine if Brexit is really in their interests.”

He ended his speech paraphrasing Hannah Arendt, a political theorist who fled Nazi Germany: “A full understanding of all the consequences of the political process is the only way to reverse the irreversible flow of history”.

Meanwhile, French finance minister Michel Sapin said some US banks were looking to move their operations out of London to Paris in the wake of the Brexit vote.

At a press conference in Paris, Sapin said: “While in Washington I spoke to large American businesses and banks. Until now their question was whether Brexit will happen or might it take longer than expected.

“That’s over. They are telling us clearly that there will be a transfer of activity. It’s no longer a question of if but when. I don’t know to what extent or which ones.”

Connor Campbell, an analyst at Spreadex, said comments from Tusk and Sapin were contributing to the selling in the pound evident on Friday.

“Unsurprisingly this kind of rhetoric hasn’t been welcomed by the pound, which has fallen half a percent against the dollar (barely holding its head above 1.22) and 0.1% against the euro.

“While this keeps sterling above the week’s (and, indeed, decades’) lows, that fact will provide mere crumbs of comfort for the currency."

The pound was down 0.16% to 1.2234 against the dollar at 1138 BST and up 0.19% to 1.1102 against the euro at 1145 BST.