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Spanish and Dutch Are Said to Agree to Seek Soft Brexit Deal

Bloomberg logoBloomberg 12/01/2018 Esteban Duarte
A Union flag, also known as a Union Jack, right, sits next to European Union (EU) flags outside the European Commission building in Brussels, Belgium, on Monday, Dec. 4, 2017. Brexit talks risk being torpedoed by the taboo issue of the European Court of Justice, a senior British official said, as the U.K. downplayed expectations of a breakthrough when Prime Minister Theresa May meets European officials in Brussels on Monday.: U.K.Prime Minister Theresa May Meeting With European Commission President Jean-Claude Juncker And EU's Chief Brexit Negotiator Michel Barnier © Bloomberg/Bloomberg U.K.Prime Minister Theresa May Meeting With European Commission President Jean-Claude Juncker And EU's Chief Brexit Negotiator Michel Barnier

Spanish and Dutch finance ministers have agreed to push for a Brexit deal that keeps Britain as close to the European Union as possible, according to a person familiar with the situation.

Spanish Economy Minister Luis de Guindos and his Dutch counterpart Wopke Hoekstra met earlier this week and discussed their common interests in Brexit, according to the person. Both have close trade and investment ties and are concerned about the impact of tariffs. They are also worried about losing U.K. contributions to the EU budget, the person said.

The pound extended gains, strengthening as much as 1.1 percent and traded 0.9 percent higher at $1.3661 at 2 p.m. in London.

Related: Pound at highest level since Brexit vote

The 27 remaining EU nations maintained a united front in the first phase of divorce negotiations, though the solidarity is already showing signs of strain as national interests diverge in the face of future trade talks. French President Emmanuel Macron has warned countries to be disciplined and stick together to protect all their interests, in a kind of prisoner’s dilemma. EU countries have delegated the job of negotiations to the European Commission’s Michel Barnier.

A Spanish economy ministry official said the two finance chiefs underlined the importance of U.K. ties for both countries, and agreed to keep track of their common interests, while offering their full support to Barnier’s negotiating efforts. A spokesman for Hoekstra declined to comment.

The U.K. wants what it calls a bespoke trade deal with the EU, which would allow it to continue trading goods as it does now and also have access to the single market for services -- including its crucial financial services industry. But it wants to leave the single market and not be bound by its rules.

Watch: Second Brexit referendum 'not a good idea' - Finkelstein

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Barnier has made clear that the U.K.’s intention to restrict immigration from Europe and break free from judgments of the European Court of Justice means it can only expect a trade deal modeled on the one the EU has with Canada -- a dramatic downgrade from its current status. Some national governments appear to be taking a more pragmatic approach, with Italian Prime Minister Paolo Gentiloni saying last month that some kind of tailor-made deal would be needed.

The U.K. is an important trading partner for the Netherlands, whose ports face the east coast of Britain, while Spain caters to millions of British tourists each year as well as having huge investments in U.K.-based companies. While Spain is shaping up to be a U.K. ally when it comes to the future EU trade deal, tensions are already emerging over Gibraltar -- a U.K. territory off the southern tip of Spain whose status after Brexit could derail talks.

NOW SEE: 'Europe has completely turned the tables on Brexit'

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