Britain's Prime Minister Theresa May arrives for a visit to a housing estate in North London, Britain November 16, 2017. REUTERS/Leon Neal/Pool
Theresa May is set to submit a formal UK offer at a dinner with Jean-Claude Juncker on December 4 © Reuters

Britain and the EU are targeting a Brexit divorce deal within three weeks, with negotiators drawing up a political road map that seeks to overcome the toughest unresolved issues on a financial settlement and Northern Ireland.

UK Prime Minister Theresa May’s moves to settle the “divorce bill” have given new momentum to talks and negotiators have pencilled in the week of December 4 as a breakthrough moment when the two sides, within days, take decisive steps to open a second phase of trade talks.

EU diplomats say there is a better than evens chance of agreement on “sufficient progress” at an EU summit on December 14-15. But they warn that political miscalculations over the hardest remaining issues could easily derail plans. Britain has yet to disclose its offer details and diplomats fear the gap with the EU may still be large.

Germany and France remain adamantly against Britain withholding part of a financial settlement as “leverage” in later trade negotiations — a condition demanded by some Brexiters in cabinet. A viable compromise on the highly sensitive issue of the Northern Ireland border also remains elusive.

Mrs May will take a hands-on role in the final stages of the divorce negotiation. Triggering an elaborately choreographed sequence, she is set to see Donald Tusk, the European Council president, on Friday and Jean-Claude Juncker, the European Commission president, for dinner on December 4. Some diplomats expect the dinner to be the moment when a formal UK offer is submitted.

Although there will be no official negotiating rounds, technical discussions are continuing “below the radar” on a regular basis, spurred on by Mrs May’s desire to reach a deal.

Negotiators aim to complete this “stock taking” process by December 1, including the draft of a joint EU-UK text. The EU side insists it will not be possible to “jump together” but say a response can be made with little delay once a UK submission is made.

The prime minister was encouraged that Eurosceptic ministers including Boris Johnson, the foreign secretary, did not immediately distance themselves from paying €40bn or more to the EU for Brexit. “Everyone remained disciplined,” said one ally of Mrs May.

But Mr Johnson and David Davis, Brexit secretary, insist some money must be held back to ensure the UK has negotiating clout to strike a favourable trade deal next year, a potential stumbling block for many net contributor countries, including Germany and the Netherlands.

While the EU side accepts that “nothing is agreed until everything is agreed”, it will not allow the financial settlement to be “reopened” during trade talks, with revisions being made according to market access. Berlin is also resisting any conditions that directly tie a financial settlement to the trade deal. One senior EU diplomat said such demands would take Britain down “a dangerous path”.

The issue of how to avoid a hard border in Northern Ireland remains politically volatile. Dublin’s demands for Northern Ireland to avoid post-Brexit regulatory divergence from Ireland were described as “reckless” by Arlene Foster, the leader of the Democratic Unionist party which makes up Mrs May’s Commons majority.

Diplomats are working on compromise language that refers to the need to maintain north-south regulatory convergence within the context of future EU-UK relations. The talks, however, remain extremely difficult, with trust waning between Dublin and London.

Simon Coveney, Ireland’s foreign minister, told the Evening Standard that a €40bn offer from Mrs May was not sufficient and that she would also have to address the Irish border question.

He said: “Anybody who thinks that just because the financial settlement issue gets resolved . . . that somehow Ireland will have a hand put on the shoulder and be told, ‘Look, it’s time to move on’. Well, we’re not going to move on.”

The gap over what the EU will offer in December to “reciprocate” the UK offer is narrowing. Mrs May’s immediate focus is ensuring the EU27 recognises “sufficient progress” on divorce talks, while signalling progress towards a transition deal “of around two years” and a trade deal.

But, crucially, Mrs May does not expect the EU to adopt concrete so-called negotiating “guidelines” on either subject at the summit — a step Berlin and Paris were resisting. Some EU officials believe guidelines could still be possible next month if the UK moves swiftly to resolve divorce issues.

On the trade talks, one May ally said: “They might decide to wait a couple of weeks — that wouldn’t be a problem.” This would also give the prime minister more time to hold crucial talks in her cabinet about what the future UK/EU relationship might look like.

Meanwhile on the transition deal, Mrs May wants to show Britain’s business community that she will deliver an “implementation phase”, although British officials do not expect the broad outlines of the deal to be in place until February.

Get alerts on European Union when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article