20 October 2017

Financial Times: EU leaders demand May makes ‘firm and concrete’ Brexit divorce offer

UK prime minister Theresa May has been told by EU leaders to make a “firm and concrete commitment” to increase her initial €20bn Brexit divorce offer, with French president Emmanuel Macron suggesting the final bill should be more than €40bn.

Mrs May left a two-day Brussels summit with a message that if she wants to break the deadlock in Brexit talks, she needs to put more money on the table before the next European Council meeting in December.

Although Donald Tusk, council president, said the summit had been conducted in a spirit of “trust and goodwill”, Mrs May’s initial hopes that she could use the meeting to instigate negotiations on trade and a transition deal were dashed.

Mr Macron welcomed Mrs May’s offer in her Florence speech last month to pay €20bn towards the EU budget in 2019 and 2020 but said she would have to go much further to cover outstanding commitments made by Britain.

“We need to have a complete approach to [the UK's] financial commitments and in that regards we haven't done half the journey,” he said, in comments implying that the final bill should in excess of €40bn. Brussels has previously indicated it wants a final net settlement of €60bn.

But while German chancellor Angela Merkel and Mr Macron took a tough line on Brexit, both leaders were keen to show support for Mrs May as she takes on Eurosceptic hardliners at home.

At a press conference on Friday, Mrs May confirmed that the UK would go through Brussels’ demands for more money on a “line by line” basis, with some in the Conservative party likely to resist strongly an exit bill running to tens of billions of pounds.

She also told EU leaders that the UK wants a trade deal with the EU based on “high regulatory standards” — a signal that she does not want to ditch a European economic model to pursue a “Singapore-style” regime of lower taxes and light regulation.

Mrs May said the future partnership between the UK and EU should be “based upon the same set of fundamental beliefs in not just democracy and rule of law, but also free trade, rigorous and fair competition, strong consumer rights, and high regulatory standards”. She added that an agreement on EU citizens’ rights after Brexit was close, saying: “Let me be clear, whatever happens we want EU citizens and their families to stay.”

The EU27 leaders adopted the final summit communique on Brexit in just 90 seconds, saying that while they welcomed Britain’s offer to honour financial commitments, “this has not yet been translated into a firm and concrete commitment”.

The European Council said it stood ready to move ahead on talks on “the future relationship and on possible transitional arrangements” in December if Mrs May satisfied their demands on the financial deal in the coming weeks — and further progress is made on the issues surrounding Ireland and citizens’ rights.

[...] Mrs May told fellow leaders on Thursday night that she had taken significant political risks to get to this point, and implored them to recognise that her scope for further concessions would be limited if they failed to respond. [...]

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Related article on Financial Times: May’s Brexit weakness focuses EU minds

[...] the question discussed during an hour-long summit discussion in Brussels’ Justus Lipsius building was whether pushing the demands could topple Mrs May and leave the EU facing a Eurosceptic hardliner across the table in Brexit talks.

Some European diplomats suggest it might be easier to deal with a committed pro-Leave Tory prime minister, but that is a minority view. “She’s our best hope of a negotiated outcome and a smooth transition,” said an adviser to one prime minister.

Mrs May’s weakness is now a critical factor as Brexit enters its most crucial phase.

On one level the EU is exploiting Mrs May’s precarious position, with France and Germany dashing her hopes of an early breakthrough in talks in the hope they can wring more money from Britain during the autumn.

The suggestion among leaders is that Mrs May should at least be forced to accept in principle Britain’s obligation to outstanding commitments on exit — known as reste a liquider — which could amount to €30bn more than the €20bn Britain has already put on the table.

But the demands are tempered by a fear, reinforced by the British newspapers read assiduously in European capitals, that Mrs May’s position as a voice of moderation — who favours an EU trade deal based on “high regulatory standards” — could be jeopardised if she was backed into a corner.

The British prime minister, who once claimed she needed a big electoral mandate to stand tall in the European Council, has adapted her position and is now trying to make her weakness into a strength.

In a presentation over dinner on Thursday night, she told leaders of the political risks she had taken in a conciliatory speech in Florence last month, in which she put €20bn on the table and agreed to all the EU’s terms on a future transition deal.

“She told them about the difficult political backdrop,” said one British official. The BBC reported one UK government figure saying that Mrs May’s “weak and stable” position could actually be useful to her.

Mrs May failed to get the green light she had hoped the summit would deliver for the start of talks on the transition deal — which British industry badly wants. That discussion is now set to resume in December.

But while the EU27 continues to put pressure on Mrs May, there was a concerted effort to ensure that she did not look isolated in Brussels and to recognise that Florence was a step in the right direction.

Mr Macron and Angela Merkel went out of their way to talk to Mrs May for the cameras. “The ball is not only in Great Britain’s court, it is also in our court at the same time,” the German chancellor said on Thursday night.

At a press conference on Friday, Mrs May confirmed that the UK would go through Brussels’ demands for more money on a “line by line” basis, with some in the Conservative party likely to resist strongly an exit bill running to tens of billions of pounds.

Leo Varadkar, the Irish prime minister, was among three or four leaders who argued that the EU needed to do more to guide Mrs May through the political minefield of Conservative Eurosceptic politics by offering suggestions for compromises. [...]

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