European Union President Donald Tusk will yesterday finally unveil negotiating guidelines for the future relationship with Britain which warn London it can not have completely free trade after Brexit.
"The problem is everyone has seen this as a regulatory issue, but financial services is really a trade issue", he said.
A draft offer seen by Reuters said the EU wanted a close partnership with Britain, but its depth would be limited by Britain's own wish to leave the bloc's single market and the customs union.
Mr Varadkar said Ireland wants a "deep, comprehensive and ambitious" future deal between Britain and the European Union while "ensuring a level playing field".
In a joint statement airport associations ACI Europe and the AOA welcomed the comments "This charts the way forward for the future aviation relationship and thus potentially reduces uncertainty for our sector", it says.
"We should all be clear that, also when it comes to financial services, life will be different after Brexit."
Visiting Dublin this afternoon, Donald Tusk said British prime minister will have to come up with a viable solution to the border and protecting the Good Friday Agreement.
The EU insists reciprocal market access for fishery products must be negotiated as part of the future agreement, and that the level of access to the EU domestic market must be conditional on the level of access for EU vessels to the United Kingdom fishing grounds and their resources as well as on the level of cooperation in the management of shared stocks. It's also why FTAs (free trade agreements) don't have detailed rules for financial services.More news: Arsene Wenger uses boxer analogy to describe Arsenal's nightmare run of form
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For that reason Brussels is happy to offer a liberal goods regime.
The EU has said Britain can not continue to have free access to the single market because it has ruled out continuing to meet its membership conditions - chief among them the free movement of workers from other EU countries to Britain.
"Any backsliding on the commitments made so far would create a risk to further progress in Brexit negotiations", said Mr Tusk.
Tusk stressed that it would in no way allow Brexit to lead to interruptions in UK-EU relations, so it is necessary to start discussions on the issue as soon as possible.
British opponents of Brexit say Tusk's assertion that trade will become "more complicated and costly" shows that leaving the European Union is a mistake.
Reiterating that this is not a "zero sum game" where a loss of market share in Britain would automatically benefit the rest of Europe, the Chancellor added that he would "challenge the assertion" that financial services can not be part of a free trade agreement and criticised "sceptics" who don't believe such a deal is possible.
European Commission President Donald Tusk has published guidelines for the future relationship, stressing that Britain can't take a "pick and mix" approach to membership benefits. That is the essence of Brexit'. "In fact, this will be the first FTA in history that loosens economic ties, instead of strengthening them", Tusk added.
'It would be completely irresponsible to create an atmosphere where we can say, don't worry, everything will go well and smoothly because we simply don't know, ' Katainen said.