May's future questioned as Barnier rules out Chequers Brexit plan

May’s plans for a “common rulebook” for goods but not services were not in Brussels’ best interests, Barnier said in an interview published in German newspaper FAS on Sunday, ramping up the pressure on the Prime Minister as she claimed that she would not compromise on her plan.

Britain must commit to either remaining in the single market and continuing to adhere to EU trade regulations like EU outsider Norway, or to exiting it entirely, according to Barnier ahead of a November deadline for a deal to be agreed before the Brexit date next March.

"But if we let the British pick the raisins out of our rules, that would have serious consequences. Then all sorts of other third countries could insist that we offer them the same benefits," said Barnier, adding that such a deal could not be agreed as it would be the “end” of the EU.

May's blueprint, which was signed off by the cabinet at her Chequers country retreat earlier in the summer, aims for a digital border between the Northern Ireland and the Republic of Ireland to enable the UK to distinguish between goods bound domestically or for the EU, as well as setting different tariffs for goods bound for each market and collecting duties for the EU. The proposal also would keep EU rules on British goods and free movement, which allows EU citizens to collect benefits.

In response to Barnier’s comments, a government spokeswoman said: "We are confident that we have put forward a proposal that is precise, pragmatic and that will work for the UK and the EU."

The Chequers proposal has been roundly criticised by a large faction of Conservative party dissidents led by the chairman of the European Research Group focused on Brexit, Jacob Rees-Mogg, which are working on an alternative blueprint they plan to publish next month. This paper will offer an alternative view outlining the advantages of a 'hard Brexit'.

Sunday also saw 20 Tory MPs, including the former ministers Priti Patel and Iain Duncan Smith, join the 'Stand Up 4 Brexit' group to make a joint public commitment to scupper the proposals. Former Brexit secretary David Davis also pledged to vote against the plan, describing it as “actually almost worse than being in” the EU.

With May's plans suffering a lack of support both at home and abroad, the growing crescendo of Tory party calls for a change of leadership saw reports over the weekend of a concerted push to topper the PM. Boris Johnson was top of the list being tipped as the next PM, with bookmakers slashing their odds on Monday.

At Ladbrokes, for example, odds were cut from 5/1 to 9/2, with Jacob Rees-Mogg's odds pushed out from 8/1 to 10/1.

Fresh uncertainty surrounding the Brexit saga has once again taken its toll on the sterling, which slumped to around $1.29 on Monday.

Barnier has not changed the narrative that the EU27 has pronounced its verdict on Chequers implies that the UK needs to decide its choice among the options the EU27 could agree to, such as a customs union or Canada style free-trade-agreement’, Berenberg economist Kallum Pickering said the Frenchman's comments simply adds to PM May’s woes.

The PM now has two options, said Pickering: "to try and unite as much of her party as possible around the EU’s offer of a customs union and hope that she can get it through parliament, probably with some cross-party support" or to "take a hard-line approach in upcoming negotiations with the EU – as this would probably set the UK in the direction of a hard Brexit, the risk of fresh elections would rise dramatically".

Konstantinos Anthis, head of research at ADSS, said: “The momentum for the pound is pointing lower and even though we saw a relief rally over the past couple of weeks, these gains are now under threat.”