Illusion that UK can have its cake and eat it evaporates; Theresa May can prioritise sovereignty or economy, not both.

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The big picture

Could common sense be about to prevail? Government officials are said to have quietly shelved the UK’s always-improbable “have cake and eat it” approach to Brexit as recognition finally dawns that there will have to be some kind of trade-off between market access and political control.

With the Treasury and business increasingly in the ascendant since the election, ministers are being told they face a choice between protecting economic interests by compromising on free movement and the jurisdiction of the European court of justice, or prioritising sovereignty and settling for a much more limited trade deal.

Premiering a new and useful way of looking at Brexit variants (as opposed to the vague and poorly understood “hard” and “soft”), one official put it this way:

There are only two viable options. One is a high-access, low-control arrangement which looks a bit like the European Economic Area. The other is a low-access, high-control arrangement where you eventually end up looking like … a classic free trade agreement, if you are lucky.

The news came amid fresh reports of tensions between chancellor Philip Hammond and cabinet Brexiters David Davis and Boris Johnson. “Petty politics” must not be allowed to “interfere with economic logic”, Hammond said, while Davis insisted the UK would leave the single market and customs union by March 2019.

Davis’s former chief of staff, James Chapman, said May’s hard line on Brexit – particularly the prime minister’s “absolutist” stance on leaving the ECJ’s jurisdiction, had made the talks more difficult: “She’s set a red line … that hamstrung these negotiations in my view.”

The view from Europe

The EU published six new position papers last week ahead of the next negotiating session between its chief negotiator, Michel Barnier, and Davis on 17 July.

One, unlikely to go down well in London, said the ECJ should be able to “request a lump sum or a penalty payment” from the British government or the EU if either side breaks a future agreement on citizens’ rights or the UK’s divorce bill:

The withdrawal agreement should provide for an effective mechanism to ensure compliance by the parties with judgments of the court of justice handed down in accordance with the withdrawal agreement.

And if Britain was hoping for an easy win on the issue of citizens’ rights after 2019, it may have to think again. An initial EU assessment of the UK’s offer leaked to the Guardian suggested general dissatisfaction in Brussels and other capitals, with the UK position marked by:

A general lack of clarity … many issues still to be clarified, no reciprocity, a lack of legal certainty, no lifelong protection against future changes of UK law and no directly enforceable vested rights and no European court of justice.

The document even found that the UK proposal could mean EU children would be forced to apply to stay in the UK after Brexit.

Meanwhile, back in Westminster

As parliament voted on the Queen’s speech, voters were again reminded that for all the apparent rush of remain-based support to Labour in June’s election, Jeremy Corbyn’s party takes a very similar view over Brexit to that of the government.

One of the Queen’s speech amendments chosen to be voted on by the Speaker called on the government to seek to stay within the EU’s customs union and single market as part of the Brexit process. Tabled by Chuka Umunna and two Labour colleagues, it attracted the backing of 101 MPs, including 49 from Labour.

Among these were four junior shadow ministers – Andy Slaughter, Ruth Cadbury, Catherine West and Daniel Zeichner. The first three were swiftly sacked while Zeichner resigned, re-emphasising that Corbyn is set on party discipline over his notably hard-ish Brexit approach.

Elsewhere, we saw one of the more convoluted political U-turns of recent years, as ministers hinted the government could ease the public sector pay cap, before Downing Street quashed the idea, and Tory MPs voted against another Queen’s speech amendment on easing the cap.

There then followed series of other indications and agitations, interspersed by No 10 again insisting nothing had changed. If you were a nurse or teacher facing another 1% pay rise, you could be forgiven for being confused.

The aftermath of the Grenfell Tower fire continued to resonate, with a retired high court judge appointed to lead the public inquiry, and the leader of the local council, Kensington and Chelsea, resigning amid intense criticism.

You should also know

One third of non-British workers are considering leaving the UK, with highly skilled workers from the EU the most likely to go, a Deloitte survey showed.
A Swiss thinktank recommends UK seeks associate membership of European Free Trade Association to access trade deals while it negotiates its own.
The UK withdraws from arrangement allowing other countries to fish in British waters as part of “taking back control”.
Environmental lawyers gear up to stop UK scrapping EU rules after Brexit.
The UK proposal to protect the rights of EU citizens after Brexit is so poor it will badly damage the rights of Britons on continent, campaign groups say.
Government Brexiteers are inspired by UK’s imperial past, their choice of art reveals.
EU ambassadors in the UK explore the possibility that Brexit might be reversed.
Dublin is to welcome more than a dozen London-based financial services firms in preparation for Brexit.
UK plans for biometric residence identity cards for EU nationals and new rules on family members joining them could prove major article 50 flashpoints.