Philip Hammond and David Davis in Brexit trade plea to avoid global crash

Philip Hammond and David Davis have raised the spectre of another global crash if the UK fails to get its way on financial services when it leaves the EU.

The Cabinet ministers, who were on opposing sides in the referendum campaign, joined forces to argue a trade deal which includes financial services was integral to the “bespoke” arrangement the UK wants.

It comes after the EU’s chief Brexit negotiator Michel Barnier said the UK would get no special treatment for the City of London and had narrowed its options by deciding to quit the single market.

But the Brexit Secretary and the Chancellor upped the ante in a joint article for German newspaper Frankfurter Allgemeine as they both jetted to Germany for a Brexit charm offensive.

They wrote: “The economic partnership should cover the length and breadth of our economies including the service industries - and financial services.

“Because the 2008 Global Financial Crisis proved how fundamental financial services are to the real economy, and how easily contagion can spread from one economy to another without global and regional safeguards in place.”

And they added: "It makes no sense to either Germany or Britain to put in place unnecessary barriers to trade in goods and services that would only damage businesses and economic growth on both sides of the Channel.

"So as Brexit talks now turn to trade, the UK will look to negotiate a new economic partnership with the EU - the most ambitious in the world - that recognises the extraordinary levels of interconnectedness and cooperation that already exist between us.”

Mr Hammond will be addressing the Die Welt Economic Summit in Berlin today, while the Mr Davis will be meeting CEOs from major German businesses in Munich.

It comes amid warnings that Germany is opposed to a bespoke arrangement that will separate areas where the UK will stay close to the EU, areas where it will diverge and areas within a regulated middle-ground.

One official in Brussels told the Daily Telegraph the plan sounded like “the latest episode in the ‘cake and eat it’ sitcom series” and that German Chancellor Angela Merkel viewed it as a “serious risk to the integrity of the EU and its single market”.

Meanwhile, the Financial Times reports that the EU is warning UK firms to be prepared for a legal lapse in regulations after Brexit in case Britain crashes out of the bloc without a deal.

Talks on the transitional arrangements after the Brexit date of March 2019 and on the future trading relationship are set to officially start in March this year.