Brexit talks in 'disturbing deadlock' over divorce bill, says EU negotiator

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David Davis, the UK’s Brexit secretary, and Michel Barnier, the EU’s chief negotiator
David Davis, the UK’s Brexit secretary, and Michel Barnier, the EU’s chief negotiator, give an update on the progress of negotiations in Brussels. Photograph: Emmanuel Dunand/AFP/Getty Images

The Brexit negotiations are in a “very disturbing state of deadlock” over Britain’s divorce bill but decisive progress before Christmas is still within reach, the EU’s chief negotiator has said.

Michel Barnier told reporters during a joint press conference with the Brexit secretary, David Davis, that he would would not be able to recommend to EU27 leaders at a summit in Brussels next week that “sufficient progress” had been made to allow talks over future trade relations to begin.

Brexit talks still deadlocked, says Barnier, but 'decisive' progress possible before Christmas - Politics live

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The main stumbling block continues to be the UK’s refusal to accept the EU’s analysis of what it will owe on leaving the bloc in March 2019, with Barnier saying at the end of the fifth round of talks that there was no question of him making “concessions”.

Estimates on the size of the divorce bill have varied from around €60bn to €100bn (£54bn to £90bn).

Barnier acknowledged the momentum given to the talks by Theresa May’s speech in Florence, where she said the UK would pay about €20bn to ensure no member state would lose out in the two years directly after Brexit and would honour its existing financial commitments.

“This week, however, the UK repeated that it was still not ready to spell out these commitments,” Barnier said. “On this question, we have received a state of deadlock, which is very disturbing for thousands of project promoters and very disturbing also for taxpayers.”

In a further sign that the talks are on a knife-edge seven months into the two years allowed under the article 50 withdrawal process, Barnier said: “A no-deal will be a very bad deal and, to be clear, on our side we will be ready to face any eventualities and all the eventualities.”

The pound dropped almost a cent against the dollar, or 0.6%, to $1.3145, when Barnier announced that sufficient progress had not been made on the opening issues of citizens’ rights, the financial settlement and the Irish border.

However, there were signs from both men that they believe EU leaders could break the current stalemate at next week’s European council summit, potentially by allowing Barnier to start scoping out how a transition period after March 2019 could work.

Davis said the UK’s understanding of what it would pay in the divorce bill “can only come later” but asked for leaders to seize the momentum provided by May’s speech.

“I make no secret of the fact that, to provide certainty, we must talk about the future,” Davis said. “The prime minister’s speech set out the scale of our ambition for a deep and special partnership with the European Union and also laid out the case for a simple clear and time-limited period of implementation. I hope leaders of the 27 will provide Michel with the means to explore ways forward with us on that.

“As we look to the October council next week, I hope the member states will recognise the progress we’ve made and take a step forward in the spirit of the prime minister’s Florence speech.”

EU 'refusing to engage on rights of Britons living in Europe'

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Barnier said he remained “convinced today that with political will, decisive progress is within our grasp in the next two months”.

“Slowly but surely over the next few weeks I will explore the way forward. I will explore ways to get out of this deadlock we find ourselves in,” he said. “We are in a deadlock at the moment but I am sure that with the necessary will and on the basis of the commitments entered into by Theresa May in Florence we can find a way out of the deadlock.”

EU sources said there remained potential for the council to allow Barnier to scope out some of the details of a transition period, although a decision has yet to be made. Other diplomats said the chances of such a development remained small.

One senior diplomat said there had been limited room for progress in the latest negotiating round: “I think [this week] was more about parking the car without scratching the paint or bursting a tyre.”

A senior British official described Barnier’s suggestion that the talks were in “deadlock” as an “elegant cry for help” to EU leaders to widen his mandate for the negotiations.

On citizens’ rights, Davis sounded an optimistic note, saying the latest round of talks had brought “the two sides even closer” to give legal certainty to the 3.5 million EU nationals in the UK and 1 million Britons in the rest of the EU.

Barnier sounded more cautious, highlighting stubborn disagreements on family reunification and the export of social security benefits after Brexit. Brussels wants to ensure EU nationals living in the UK retain existing rights to bring parents to live with them and take disability pensions abroad, while the British government would like to change the rules after Brexit.

The UK side has been frustrated by the EU’s refusal to guarantee onward movement rights for British nationals, meaning, for example, a Briton in Germany would be locked into that country, without the right to move to another EU state. Barnier said the issue remained on the table to be discussed at “the appropriate time” without spelling out when that might be.

Overshadowing an agreement on citizens’ rights is the status of the European court of justice. Behind the scenes, halting progress is being made despite bellicose warnings from Tory backbenchers.

The UK conceded last month that European law could take “direct effect”, allowing EU nationals in Britain to cite European law in any legal dispute. But the EU continues to press for guarantees about what this means in practice.

Davis said he had drawn up a written statement for EU27 diplomats setting out further details. “We want to reassure those European citizens living in the UK that their rights and status would be enshrined in UK law,” he said. In a bid to assuage concerns over the 85-page forms EU nationals must complete to acquire permanent residence, Davis said there would be a “completely new, streamlined low-cost” registration process.

On the consequences of Brexit for Northern Ireland, Barnier and Davis said agreement had been reached on the continuation of the common travel area. They both added, however, that there was more work to do.

Stanley Ward
By Stanley Ward 12/10/2017 12:18:00