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Abu Dhabi, UAEFriday 21 September 2018

UK set to increase Brexit ‘divorce bill’ offer to EU

The EU has set a December deadline to resolve the row over money in order to move onto future trade talks

Britain's Chancellor Philip Hammond attends the BBC's Marr Show in London, November 19, 2017. Jeff Overs/BBC Handout via Reuters
Britain's Chancellor Philip Hammond attends the BBC's Marr Show in London, November 19, 2017. Jeff Overs/BBC Handout via Reuters

The UK could be about to improve its financial offer to Brussels as it seeks to break the deadlock in Brexit talks ahead of a crucial EU summit in December.

Ministers of Prime Minister Theresa May’s cabinet are set to meet on Monday to decide a response to the EU’s December deadline to resolve the row over money – which is the most controversial matter in the negotiations – in order to move onto future trade talks.

On Sunday, Chancellor Philip Hammond told the BBC that Britain is “on the brink of making some serious movement forward” and starting to break the “logjam” in the Brexit negotiations.

While Mr Hammond is among the most pro-European members of the cabinet, his suggestion follows Brexit Secretary David Davis’s hint from Berlin on Friday that more details on a financial settlement would be presented within weeks. With businesses clamouring for clarity and the departure just 16 months away, pressure is mounting to break the impasse.

The EU is pushing for Britain to pay at least 60 billion euros to cover existing budgetary commitments and future liabilities. So far, Mrs May has limited commitments to honouring about 20 billion euros of budget payments after Brexit, which is scheduled for March 29, 2019.

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The Times said that while the government wouldn’t put a figure on it, it was likely to add another 20 billion euros to what it’s already agreed to. The offer, if it comes, would follow a flurry of diplomatic activity with Mrs May having flown to a summit in Sweden to meet EU leaders last week and Davis touring European capitals.

What remains to be seen is whether key players in Mrs May’s Cabinet play along. Environment Secretary Michael Gove, a prominent opponent of the EU, said last week he wouldn’t block Mrs May from “doing what she believed was right” on the exit bill, in what could signal a willingness from at least part of the pro-Brexit faction to allow some flexibility.

Foreign Secretary Boris Johnson, who’s said in the past that the EU can “go whistle” if it wants a bigger financial settlement from the UK, has seen his influence - and ability to block a deal - reduced after a series of missteps.

Either way, time is pressing on Britain to come up with an improved offer after EU President Donald Tusk said early December would be “the latest” for additional concessions on the bill if talks are to advance beyond the divorce and on to future trading arrangements after a mid-December summit.

“We will make our proposals to the European Union in time for the council. I am sure about that,” Mr Hammond told the BBC. Asked if time was running out for the U.K. to make an improved offer on its exit payment, he replied that “the council is in three weeks, so, yes.”

The EU, meanwhile, is making internal preparations to expand the mandate of chief negotiator Michel Barnier. That would allow him to discuss the framework for a future trade relationship with the U.K. as well as transitional arrangements toward a new deal. Mr Barnier will brief EU ministers at their meeting on Monday in Brussels.

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