25 APRIL 2017 (Date Published: 25 APRIL 2017 )
By Peter Foster E
CREDIT: ANDY RAIN
Britain will have to pay into the EU budget up until 2020 if it wants Europe to grant the UK reasonable terms on a Brexit transition deal, senior sources in Whitehall have told The Telegraph.
The idea, which is being actively discussed by British Brexit negotiators, would require a softening of British negotiation red lines in order to buy leverage and political goodwill in talks with the EU over a future trade deal.
Britain’s departure from the EU will leave a €10bn black hole in Europe’s finances which is causing significant anxiety in chancelleries across Europe, including in Berlin, which fears it will have to pick up the bill for any shortfall.
The immediate headache for Europe will be healing the gap between Britain’s departure in March 2019 and the end of the current seven-year budget framework which ends in 2020. British contributions to healing that gap could cost some €17bn euros.
“Payments up to the end of this MFF [Multi-annual financial framework] is something that we could put on the table which would help them fix a big short-term problem in their budgets,” said the source with firsthand knowledge of the UK pre-negotiation deliberations.
However the payments would be only be offered “in exchange” for a “sensible” EU offer on a transition deal – or what Theresa May has called an “implementation phase” – that both sides envisage will be needed for at least two years after Brexit day in March 2019.
The senior Whitehall source added that the UK side had also not ruled out “ongoing payments” of some kind, in exchange for a Free Trade Agreement (FTA) which is expected to take some time to negotiate and ratify after Brexit itself.
The ideas, which are highly sensitive given the likelihood of domestic political opposition from some hardline Brexiteers in Westminster, reflect a growing recognition on the British side that money will provide key leverage in the coming talks.
It comes as Jean-Claude Juncker, the president of the European Commission and Michel Barnier, the EU’s chief Brexit negotiator, arrive in London on Wednesday for face-to-face talks with Theresa May who will hold a dinner for the two in Downing Street.
At the same time Boris Johnson make his first speech of the election campaign, in which he is expected to say Britain will not turn its back on the World after Brexit.
Mr Davis, the Brexit Secretary, will also make a speech about the Government’s plans to make a success of Brexit, striking an upbeat note despite a stream of tough signals emanating from Brussels.
The European side has been hardening its lines on Brexit since Theresa May triggered Article 50 last month, and is making a transitional arrangement contingent on continued budget payments, free movement of people and accepting the jurisdiction of the European Court of Justice (ECJ). – The Telegraph