The European Union’s chief negotiator has warned Britain to start “negotiating seriously” as the stand-off over the Brexit divorce bill intensified.
Speaking before the latest round of talks began in Brussels today, Michel Barnier voiced frustration at the government’s “ambiguity” and the failure of ministers to publish a position paper on the UK’s potential financial liabilities.
As the rhetoric on both sides escalated, a senior government source described Mr Barnier’s attack as “ill-considered and unhelpful”, while David Davis, the Brexit secretary, pointedly called on the European Commission to show “flexibility and imagination” in this week’s discussions.
British sources made clear that the lack of a position paper was deliberate and that the government was not prepared to commit to a financial settlement without the EU agreeing to discuss a transition package.
They added that the policy documents issued in the past fortnight on future customs arrangements, Northern Ireland and judicial co-operation were designed to illustrate how intertwined all the Brexit issues are.
The caustic exchanges are leading to concerns that the issue will not be resolved before a meeting of EU leaders in October that will decide whether to authorise the start of future trade talks with the UK.
Philip Hammond, the chancellor, has warned the prime minister that failure to make significant progress in the negotiations by the end of the year would trigger a damaging business exodus as companies begin to implement contingency plans for a hard Brexit.
Ministers are determined not to give away valuable negotiating cards — on either money or the Irish border — without concessions from the EU on a transition deal and a future customs agreement.
In his statement, Mr Barnier said he was ready to intensify the pace of negotiations if the UK came forward with clear positions on all of the bloc’s three priority issues — citizens, money and Ireland.
“To be honest, I’m concerned. Time passes quickly,” Mr Barnier said. “We need UK positions on all separation issues. This is necessary to make sufficient progress. We must start negotiating seriously.
“We need UK papers that are clear in order to have constructive negotiations, and the sooner we remove the ambiguity, the sooner we will be in a position to discuss the future relationship and a transitional period.”
Mr Davis said the talks would be about “driving forward the technical discussions across all the issues”.
“We want to lock in the points where we agree, unpick the areas where we disagree, and make further progress on the whole range of issues,” he said. “But in order to do that we require flexibility and imagination from both sides, like the European Council asked for on some subjects,” he added, referring to EU leaders’ political guidelines on Irish issues.
Under one proposal mooted within the Brexit department, the UK would agree to continue payments into the EU budget for two years after leaving in return for preferential access to the single market and customs union.
Yesterday the French government denied that it would be prepared to sign up to such a deal and start talks as early as October. Unusually, it issued a statement describing the reports as “founded on absolutely nothing”.
British and EU diplomats privately acknowledge that a solution to Britain’s exit bill must come in part from a transitional arrangement, which would effectively continue the UK’s budget contributions.
This would cover the gap in the EU’s budget for the two years after Brexit, while allowing Britain to portray the payments as the cost of an implementation period to benefit business, rather than as debts.
Britain pays about £9 billion a year to the EU. Brussels is expected to demand a total net Brexit divorce payment in the region of £40 billion.
In internal government discussions, Mr Hammond has relayed the concern of business chiefs that key decisions cannot be delayed much longer.
“Hammond’s point is that you’ve got company X about to make this critical decision, you can’t just say, ‘Trust us, we’ll get there in the end’,” a Downing Street source said.
Among those likely to move areas of their operation outside the UK are pharmaceutical, chemical and financial companies who rely on the EU’s regulatory framework for access to European markets.
