The U.K. thinks Michel Barnier is bluffing, and that the City will be just fine after Brexit. Senior officials say privately they think the European Union’s chief negotiator’s hard-line stance that financial services will be excluded from any post-Brexit trade pact won’t last, Tim Ross reports. Barnier set out his position clearly in December that there was no chance financial services could keep the access they now enjoy as it would be unprecedented. Barnier blames the U.K.’s own red lines in the negotiation, saying it’s a consequence of Britain’s decision to leave the single market. The future of banking after Britain leaves the EU is one of the biggest questions in the Brexit talks, and banks have led the way in making preparations to deal with a disruptive split. Talks on the future relationship haven’t started yet, and the two sides have just 10 months to hash out an outline agreement before an October deadline. First of all the transition deal will be discussed, and the EU expects talks on trade to begin in March. While the EU is suggesting the U.K. should aim for a free-trade agreement like Canada’s, the U.K. is pushing for something better, which would include its huge services industry. Prime Minister Theresa May has also struck an upbeat tone on the outlook for financial services, and has been backed up by Bank of England Governor Mark Carney. In December, May and Carney both said the EU needed the City of London as it’s the “banker for Europe.” Carney said it didn’t make sense for Barnier to rule out a deal for financial services, saying just because it would be without precedent, doesn’t mean it can’t be done. Financial services could be an area in the negotiations where splits emerge between the 27 remaining EU members as their interests diverge. May was cheered last month by comments from Polish Prime Minister Mateusz Morawiecki and Italian Prime Minister Paolo Gentiloni indicating a willingness to consider a deal that covers services. Still, it could be that the outline agreement reached by October won’t include a whole lot of detail about the future trading deal – and so the fate of financial services still won’t be sealed until much later. Brexit Latest On the Farm | The U.K. government will match EU agricultural subsidies for five years after Brexit, giving farmers longer to adapt to life after the split than other sectors and adding billions to the cost of the divorce. Brexit-backing Environment Secretary Michael Gove will announce the plans in a speech in Oxford on Thursday. Second Referendum | The overwhelming majority of members of Theresa May’s Conservative Party don’t want there to be a second referendum on Britain’s EU membership, according to a survey published on Thursday. For the other main U.K. parties, the opposite is true. Seventy-eight percent of Labour members want a second referendum, according to the YouGov survey of political party members for Queen Mary University of London. The proportions for the Scottish National Party and Liberal Democrat parties are 87 percent and 91 percent, respectively, while just 14 percent of Tories want a rematch. Blair’s Battle | Former Prime Minister Tony Blair weighed back into the Brexit debate, as his institute released a compilation of data totting up the cost of the split, and Blair slammed the current Labour leadership for failing to oppose Brexit. “If we do leave Europe, the governing mind will have been that of the Tory right. But, if Labour continues to go along with Brexit and insists on leaving the Single Market, the handmaiden of Brexit will have been the timidity of Labour,” he wrote in an article on his website. Eastern Front | Poland’s new premier urged a united front with Hungary in talks over the European Union’s next budget cycle, closing ranks against suggestions the two countries should get less aid for undermining the rule of law. Net recipients of EU funding are already set to receive less in development funds as Brexit reduces the budget pot. French Raid | The U.K. is braced for a possible French raid of its asset-management industry, the Financial Times reports. France is trying to expand its share of the European fund-management sector and is backing moves to tighten rules that now allow fund managers to set up a fund in one country while outsourcing portfolio management to staff in another country. On the Markets | This will be the year the pound shakes off its blues and returns to pre-Brexit levels, according to the currency’s most bullish forecaster. An early Brexit transition deal and positive economic surprises could boost sterling’s fortunes and even drive a Bank of England interest-rate hike in the first half of the year, according to Viraj Patel, a foreign-exchange strategist at ING Groep NV, which sees the currency gaining to $1.53 by year-end. The pound also tops the buy list of Bank of America Merrill Lynch and Nomura International Plc. And Finally… Two Tory lawmakers revealed they jokingly nicknamed their baby son “Brexit Clifford” because he arrived on the day last March when Theresa May triggered the start of negotiations. His real name is Clifford, the Sun reported, and the pair married in the Palace of Westminster in December.