* UK cabinet discusses long-term relations with EU
* Wants more ambitious trade deal than Canada’s
* EU has cautioned UK cannot “cherrypick” benefits
* Poll suggests Britons would now vote against Brexit
* Labour leader predicts general election next year (Adds context, poll)
By William James
LONDON, Dec 19 (Reuters) - Prime Minister Theresa May told her cabinet on Tuesday Britain’s objective in leaving the EU should be a deal that enables it to set rules suited to its situation, her spokesman said after a cabinet meeting to establish long-term goals for exit talks.
Having secured a deal to move European Union departure negotiations to the next stage last week, Tuesday’s discussion marked the start of May’s next battle over Brexit: what kind of long-term relationship will Britain have with the bloc?
In making that decision, May must manage deep divisions at home, including among senior ministers, over whether to align Britain’s economic future with the EU, or diverge from the bloc and seek a more global role.
She will then have to go out and strike a deal in Brussels, where the EU is adamant that Britain cannot enjoy the full benefits of membership after leaving, wary of the need to deter others members from following suit.
“The PM said it was clear what the cabinet’s objective is: a deal which secures the best possible trading terms with the EU, enables the UK to set rules that are right for our situation and facilitates ambitious third-country trade deals,” the spokesman said.
The meeting lasted almost two hours and saw 25 ministers speak on a subject at the heart of the country’s fraught debate over leaving the EU. It was the first time cabinet has tackled the so-called “end state” of the negotiations since the referendum vote to leave in June last year.
Further cabinet talks are expected early next year to firm up the best means of achieving May’s goals - the stage of the discussion most likely to push ideological differences between “hard” and “soft” Brexiteers out into the open.
Asked whether there was agreement on May’s key aims, the spokesman said: “Yes, it’s clear what we want to achieve. It was set out in a good, clear, detailed discussion in which there were contributions from a large majority of the cabinet.”
On the eve of the meeting, EU chief negotiator Michel Barnier offered a reminder of the difficult talks that also lie ahead in Brussels, repeating the bloc’s position that London’s huge financial sector would not be given special treatment.
May’s spokesman said she had ruled out a final economic partnership with the EU modelled on the European Economic Area - whose members allow free movement in exchange for full access to the EU’s single market - and her aim was to get a more ambitious deal than the one signed between Canada and the EU last year.
“The Brexit Secretary (David Davis) and the prime minister were clear that Britain would be seeking a bespoke deal.”
Before talks resume in Brussels, May must maintain a delicate balancing act to keep hardline Brexit ministers like foreign minister Boris Johnson behind her, without alienating those like finance minister Philip Hammond who believe Britain should be more wary of diverging from EU norms and standards.
May needs the full backing of her cabinet after a misjudged snap election in June stripped her Conservative Party of its majority in parliament, weakening her authority both at home and in Brussels.
Should she stumble, opposition Labour Party leader Jeremy Corbyn says he is ready to take her place, predicting another national election in 2018 in an interview with Grazia magazine.
The veteran socialist led Labour to unexpected gains in the June 8 vote, and has promised to deliver a Brexit more focused on protecting jobs and workers rights. That has been interpreted as meaning preserving ties with the EU in many areas.
But, May has outlasted many of the dire prognoses offered after her June election flop. That is partly due to fears that fresh elections would put Corbyn in charge, and partly because few Conservative rivals want the task of delivering a decision which remains unpopular with large swathes of the electorate.
A poll on Saturday showed 51 percent of Britons would now keep EU membership while 41 percent want to leave the bloc. The shift was mostly among those who did not vote in last year’s referendum, while around nine in 10 “leave” and “remain” voters were unchanged in their views. (Reporting by William James; editing by Andrew MacAskill and Stephen Addison/Mark Heinrich)