The rebate on the UK payments to the EU budget is worth £4.5bn a year on average. The money is never sent to Brussels, one aspect of the misleading claim on the leave campaign bus.
A senior EU source said the rebate would go if the UK sought to extend the transition beyond 2020. That is because the UK is required to contribute to EU coffers during the transition period, but by 2021 Brussels is expected to have revised its budget without the UK.
The EU27 aim to agree a new budget for 2021-7, a decision that will be taken without the UK. This requires a revision of the EU’s “own resources decision”, the law that enshrines the British rebate.
Theresa May has said she wants a transition period of around two years, but in a paper released on Wednesday the government said it should be “determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin the future relationship”.
The senior EU official said this was a sign the British were not ready and were not capable of wrapping things up in 2020. [...]
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