Brexit negotiators sat face to face in Brussels Thursday for the first time in nearly a month — but officials close to the talks said there was no progress on the key stumbling block, the U.K.’s financial settlement.
“No major breakthroughs,” was the straightforward assessment of one senior U.K. figure close to the talks. A senior EU official agreed. If the U.K. is planning on making a great leap forward soon, they haven’t told the EU.
In that month away from the negotiating table, Downing Street, already fragile, has entered crisis mode. Ministerial resignations in London have fed a deepening gloom, expressed by officials in London and Brussels, that talks will not able to progress to the post-Brexit transition and trade after a summit of EU leaders in December.
The lack of movement on the key financial question that has dogged the first phase of Brexit negotiations will be deeply concerning for U.K. businesses, who are desperate for clarity about the regulatory and trade arrangements they must operate under after Britain’s official exit date in March 2019.
According to a senior EU official involved in the Brexit process, there had been no substantive discussions on the money question up to this round of Brussels talks since Theresa May’s Florence speech on September 22.
“There have been no negotiations on this, because the U.K. has been clear that they have no mandate to commit anything beyond what she said in the speech,” the EU official said.
There were lengthy talks on the issue Thursday, a second U.K. official said, and they were “productive.” But no breakthroughs.
Politics + mathematics = trouble
EU leaders welcomed May’s pledge in the Florence speech that the U.K. would continue making EU budget payments until the end of the current budget round in 2020 and “honor commitments” during its four decades as an EU member. But the U.K. has refused to be more specific on the latter component — something that the EU27 leaders say they need for the talks to progress.
“There have been technical discussions,” on the nature of the different elements of the budget, the senior EU official said. “In that sense … we do have some degree of understanding of what we are talking about.” In the end, though, the official said, the question was a matter of politics: “It really is a political issue that it is left for them to take the step, and to take it sufficiently early — because otherwise, we would miss the train.”
The EU is looking for a commitment from the U.K. not just to keep the EU budget whole, but to cover its share of ongoing EU programs such as regional and overseas aid (known as the reste à liquider or RAL), plus pension obligations accrued during Britain’s four decades as an EU member.
These figures are at the heart of the political blockage on both sides of the Channel.
British Prime Minister Theresa May addresses delegates at the annual Confederation of British Industry in London on November 6, 2017 | Daniel Leal-Olivas/AFP via Getty Images
EU leaders don’t want to pick up the tab for the U.K.’s share of EU programs it agreed to fund while a member. Equally, May doesn’t want to be perceived as paying a withdrawal fee of some €60 billion or more, which would be portrayed in the British press, and by her rivals in the Conservative Party, as selling out British taxpayers for little more than the promise of further negotiations.
On the London side, officials see the problem as an unwillingness by Brussels to accept on faith May’s broad, if vague, pledges in her Florence speech. But where the EU is insisting that May clarify what she means by financial “commitments,” the U.K. side sees Brussels as holding out for a huge windfall, while trying to inflict maximum political pain.
In announcing that there was not yet “sufficient progress” in the talks at the October European Council summit, EU officials thought they had provided London with a roadmap to Phase 2 — one that specifically envisioned the U.K. clarifying its financial commitments in exchange for assurances of a transition period after Brexit.
But with little movement since then, pessimism has been growing on both sides that December may slip by without a deal.
There are now two camps in the U.K. government, one official close to the talks said.
Most are still positive about the prospect of achieving sufficient progress in December. There is, however, “a faction” including some “notable people” — the official declined to say who — that want to manage expectations and are doubtful that Phase 2 will begin by the new year.
The reasoning of these people, according to the official, is that the EU is showing every sign of holding out on the financial settlement, conscious that the longer progress is delayed, the more pressure the U.K. will face to give in to a bigger Brexit bill.
Something else that makes this faction within U.K. ranks doubtful is a clear-eyed recognition that the EU can see the political chaos that has plagued Downing Street.
“We know they are looking at us thinking: ‘Jesus Christ, why should we reach an agreement with you now? You might have a new prime minister within months,’” the official said, with a note of despair.
Attitudes among some in London are hardening. Conservative MP David Jones, who campaigned for Brexit and until June was Brexit Secretary David Davis’s right-hand man as a minister in his department, accused the EU of being “in breach of Article 50″ by refusing to talk trade. He urged a British walkout if the EU refuses to give ground.
“I take the view that at this particular juncture, certainly at the December [European] Council [summit], we should be making it clear that if they’re not prepared to talk sensibly about the future relationship then we must assume that they’re not serious and that we should suspend the negotiations,” he told POLITICO. “In the meantime, we’ll crack on with making the necessary arrangements for life outside of the EU.”
In testimony last month to the House of Commons treasury select committee, the U.K.’s former ambassador to the EU, Ivan Rogers, said that the issue of the bill is more political than numerical.
Britain’s former Ambassador to the European Union Sir Ivan Rogers | Jack Taylor/Getty Images
He described the generally agreed-upon, back-of-the-envelope math: that RAL amounts to roughly €240 billion and the U.K. share is roughly 12-13 percent — or a total, he said, of roughly €30 billion. (The U.K.’s pension share would similarly be 12-13 percent of liabilities, currently pegged at about €70 billion, which equals €8.75 billion).
Rogers told MPs the battle over the bill was as much about politics as about legal obligations.
“You need to know the strength of your legal case, area by area, but, candidly, this is a political negotiating question as much as it is anything else,” he said.