EU chiefs claimed in a presentation last week they wanted a “level playing field” to ensure they counter “clear risks” to stop the UK slashing taxes and relaxing regulation.
But astonishing papers reveal eurocrats believe the UK is too big and too close to treat it like a normal trading partner, so they are keen to enforce restrictions on state aid.
The document, seen by the Financial Times, reads: “International rules do not adequately address the [potential] distortive effects of subsidies on investment, trade and competition.
“The EU-UK agreement will have to include robust provisions on state aid to ensure a level playing field.”
Brussels fears, for example, the UK will relax emission curbs on power stations.
The revelation is likely to anger Brexiteers desperate to unshackle Britain from Brussels red tape and explore global trade.
But keen to maintain power when the UK exits, the EU calls for “binding requirements” on anti-tax avoidance measures, transparency and information sharing.
To keep Britain in check, Brussels hopes to introduce innovative mechanisms, including trade agreements and retaliatory punishment.
EU chiefs are threatening “financial sanctions” and injunctions against companies as a “cross retaliation”. They are looking to suspend UK trading rights with a tax blacklist as a “menu of options” for punishment.
In a bid to ensure EU standards are not diluted after Brexit, the EU has called for a “tailored approach” to relations involving “non-regressor clauses”.
The paper warns “the EU has its unilateral listing process for uncooperative tax jurisdictions”.
EU notes the UK is “likely to use tax to gain competitiveness” and a low-tax economy with a “large number of offshore entities”.