May Says Juncker Clash Shows Brexit Talks Will ‘Not Be Easy’

  • German newspaper said president left meeting doubtful of deal
  • Says they disagreed over budget and sequencing of talks

UBS’s Yu Sees a Lot of Risk Already Priced Into Sterling

Follow @Brexit for all the latest news, and sign up to our daily Brexit Bulletin newsletter.

U.K. Prime Minister Theresa May alluded to the leaked details of her disastrous dinner with Jean-Claude Juncker to remind voters that Brexit talks will be tough and she alone is up to the task.

Germany’s Frankfurter Allgemeine Sonntagszeitung newspaper on Sunday said that the European Commission president left the April 26 talks at Downing Street shocked at May’s reluctance to compromise and “ten times more skeptical” of reaching a mutually acceptable deal over Brexit. It said the pair disagreed about the complexity involved in any agreement, about the sequencing of talks, and about budget contributions.

Dismissing the report as “Brussels gossip,” May didn’t outright deny its accuracy. If anything, the premier has used the growing antagonism with Brussels to bolster her claim that a personal mandate means she can negotiate Brexit more successfully. May’s refrain has been to contrast her show of strength and to depict rival Jeremy Corbyn as a “weak, nonsensical” leader.

“As we have seen in recent days, it will not be easy,” she wrote in the Western Morning News, a regional daily newspaper, as she heads to campaign in southwest England. “Across the table from us sit 27 European member states who are united in their determination to do a deal that works for them.”

Read about how May responded to Merkel’s warning she was being delusional

The report is a further sign that the initial part of the Brexit discussions will be spent resolving just what to talk about, risking a fallout even before substantive matters have been debated. The two sides have until March 29, 2019, to find common ground. At that point, Britain will leave the EU regardless of whether it has a deal or not.

After the meeting, Juncker put the chances of a breakdown in the negotiations at over 50 percent, the paper said, citing people briefed by Juncker. The commission also signaled that the U.K.’s decision to bloc a routine review of the EU’s budget, citing election campaign-period rules also known as purdah, further soured the mood. “It would be desirable and would make negotiating easier if the reservation on the mid-term review could be lifted,” its spokesman Margaritis Schinas told reporters on Tuesday in Brussels.

All this “brings home just how vast the gap is between May’s and the EU’s understanding of the Brexit rollout,” according to Henrik Enderlein, a professor of political economy at the Hertie School of Governance. “May wants her cake and to eat it too. It just won’t work. Does holding a U.K. election change matters for the talks? Not a jot.”

Enderlein added that for EU negotiators “the election is irrelevant.” An EU official said that there is a mismatch between the U.K.’s expectations for the negotiations and the view from Brussels and that the best the British government can hope for is to agree a framework for its future trading relationship before the two-year deadline.

The U.K. government is unrealistic about the pace of separation talks, the official said. At one point the president pulled out the text of Canada’s free-trade deal with the EU, and Croatia’s accession agreement, and told her the British deal would be at least as complex.

Exit Bill

Juncker was particularly alarmed by May’s view that Britain doesn’t owe the other EU states any money, FAS said. The EU’s view is that the U.K. will have to pay somewhere between 40 billion euros and 60 billion euros ($44 billion to $65 billion) when it leaves the bloc to cover its outstanding commitments.

He also thought her aim of resolving the status of EU and British citizens affected by the split at the next EU summit in June failed to appreciate the complexity of the issues involved, FAS said.

Juncker called German Chancellor Angela Merkel the next morning to brief her and their conversation prompted Merkel’s comment that some in the U.K. government have “illusions” about what lies ahead, FAS said.

A commission spokesman declined to comment on the FAS report, and pointed to Juncker’s comments on April 29, when he said the meeting was friendly and constructive.

“There are issues that clearly are not understood the same way from the technical point of view,” Schinas said Tuesday. “But we will work it out.”

— With assistance by Svenja O'Donnell, and Nikos Chrysoloras

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE