Theresa’s May’s government is poised to concede an improved Brexit settlement offer to gain EU approval to move the negotiations on to the next stage.
May reportedly has the backing of senior ministers ahead of a critical cabinet meeting on Monday afternoon. The list of senior ministers is thought to include chancellor, Philip Hammond, Brexit secretary, David Davis, environment secretary, Michael Gove and weakened foreign secretary, Boris Johnson, who famously said in July that the EU could “go whistle” over a divorce settlement. Hammond said at the weekend “we’ve always been clear it won’t be easy to work out that number, but whatever is due, we will pay”. Press reports suggest that the UK will formally offer about 40 billion Euros, versus the previous 20 billion. The news caused Sterling to rise more than half a percent to a two and a half week high of 1.3272, its strongest level since 2 November 2017. According to Bloomberg.
The U.K. could be about to improve its financial offer to the European Union ahead of a crucial meeting of the bloc’s leaders in December. Members of Prime Minister Theresa May’s divided cabinet will consider Britain’s divorce from the EU at a meeting Monday afternoon of the Brexit sub-committee that could be key to unlocking the most controversial matter in the negotiations -- money. Britain is “on the brink of making some serious movement forward” and starting to break the “logjam,” Chancellor of the Exchequer Philip Hammond told the BBC on Sunday. While Hammond is among the most pro-European members of cabinet, his suggestion follows Brexit Secretary David Davis’s hint from Berlin on Friday that more details on a financial settlement would be presented within weeks. With businesses clamoring for clarity and the departure just 16 months away, pressure is mounting to break the impasse.
The impact of a 40 billion Euros settlement offer is hard to judge as it likely to fall short of the EU’s demands, while it might enrage a substantial proportion of the British public. Bloomberg continues.
The EU is pushing for Britain to pay at least 60 billion euros ($71 billion) to cover budgetary commitments and future liabilities such as pensions for EU civil servants. So far, May has said she will make 20 billion euros of budget payments after Brexit, and is going through the other items line by line. The Times said that while the government wouldn’t put a figure on it, it was likely to add another 20 billion euros to what it’s already agreed to. There’s a risk that might not be enough to unblock talks. It’s also unlikely to go down well domestically. “If we start saying that we’re going to give 40 to 50 billion to the EU, I think the public will go bananas, absolutely spare,” Robert Halfon, a Conservative lawmaker and former minister, said late Sunday in a BBC radio interview. “That is going to be very difficult if it is going to be that sum, amount of money.” Halfon has a point: one of the main messages of the pro-Brexit wing in last year’s referendum was that it would put an end to sending large sums of money to the EU, and polling shows the British public are adverse to paying a large exit bill. A YouGov poll in September found that even a bill of 20 billion pounds was unpalatable to 63 percent of voters surveyed.
Time is running out for the financial settlement to be agreed if it is to be approved at the next EU Council meeting in mid-December. After meeting Prime Minister May on Friday, EC President Tusk indicated that early December was the deadline. As Bloomberg explains.
“We are waiting for a substantial offer from the British,” Dutch Foreign Minister Halbe Zijlstra said on Monday.
“It has to be concrete and on the table instead of in the press”…
Time is pressing on Britain to come up with an improved offer after EU President Donald Tusk said early December would be “the latest” for additional concessions on the bill if talks are to advance beyond the divorce and on to future trading arrangements after a mid-December summit. “We will make our proposals to the European Union in time for the council. I am sure about that,” Hammond said in an interview with the BBC on Sunday. Asked if time was running out for the U.K. to make an improved offer on its exit payment, he replied that “the council is in three weeks, so, yes.”
With the deadline approaching, the posturing by both sides is ratcheting up and an agreement – or otherwise – will probably go down to the wire.
The process has been complicated along the way by what sometimes looks like a game of brinkmanship. In an interview with the BBC, Davis insisted that Britain has “made all the running” and that now “I want them to compromise,” meaning the EU. Tusk responded by saying he found that position laughable: “I really appreciate Mr. Davis’s English sense of humor.”
Another point is that success or failure could well be decided at the highest political levels and relatively last minute. In Berlin on Friday, Davis said “we’ll make some decisions, political decisions, later on.” The stalemate in Brexit talks is dragging on as EU leaders refuse to discuss a future trade deal with the U.K. until sufficient progress is made on money, guaranteeing rights of citizens, and the Irish border.
Ahead of today’s cabinet meeting, an MP from May’s party warned her not to “play Santa Claus” to the EU. As the BBC reports.
The UK government cannot afford to "play Santa Claus" to EU bosses by handing over billions of pounds, a Conservative MP says. Nigel Evans accused the EU of demanding "ransom money" from Theresa May to move Brexit negotiations forwards. He was speaking ahead of a meeting between Mrs May and senior ministers to try to make progress on the stalled talks.
This was May leaving church with her husband in a red coat on Sunday.
It’s been clear that EU bureaucrats were determined to extract the maximum possible settlement to punish the UK for leaving. However, the sudden weakening in Merkel’s position, after her failure to negotiate a new coalition government, might shake Brussels’ hardline approach enough to get a compromise deal over the finishing line.
We never fully bought into the “Merkel is May’s ally” narrative, but time will tell.