U.K. Preparing Enhanced Brexit Cash Offer Ahead of Summit

Updated on
  • Chancellor says U.K. on cusp of breaking negotiation ‘logjam’
  • Members of May’s cabinet to meet Monday to discuss Brexit

Barnier Says Brexit Means Banks Lose EU Passporting

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.

Philip Hammond

Photographer: Luke MacGregor/Bloomberg

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.

How Much?

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.

“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.”

Getting to Yes

Any offer would follow a flurry of diplomatic activity: May flew to a summit in Sweden last week to talk to EU leaders on the sidelines, while Davis has been touring European capitals.

Michael Gove

Photographer: Luke MacGregor/Bloomberg

Now, it remains to to be seen is whether key players in May’s Cabinet play along. Environment Secretary Michael Gove, a prominent opponent of the EU, said last week he wouldn’t block May from “doing what she believed was right” on the exit bill, in what could signal a willingness from at least part of the pro-Brexit faction to allow some flexibility.

Boris Johnson, who’s said in the past that the EU can “go whistle” if it wants a huge financial settlement, has seen his influence -- and ability to block a deal -- reduced after a series of missteps as foreign secretary.


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.

Donald Tusk

Photographer: Marcus Ericsson/AFP via Getty Images

“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.”

The U.K. has already agreed to pay into the EU budget for two years after leaving, which it considers a step toward what the EU wants, even if the Europeans say it doesn’t go far enough.

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While May has said she intends to honor these obligations, her government hasn’t spelled out the exact items, or a methodology to calculate the dues. 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.”

Whatever Britain offers ahead of the December summit will need to be significant enough to convince other EU leaders that it’s serious about paying what it owes, something Hammond said May’s government is determined to do. 

“It’s not about demands, it’s about what is properly due from the U.K. to the European Union under international law in accordance with European treaties,” Hammond said. “We’ve always been clear it won’t be easy to work out that number. But whatever is due, we will pay.”

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.

The bloc wants the U.K. to present a proposal for avoiding the reinstatement of a hard border between the Irish Republic and Northern Ireland after 2019, and to accept European Court of Justice jurisdiction in enforcing the withdrawal agreement and the rights of citizens.

Michel Barnier

Photographer: Dario Pignatelli/Bloomberg

The EU, meanwhile, is making internal preparations to expand the mandate of chief negotiator Michel Barnier. That would allow him to discuss the framework for a future trade relationship with the U.K. as well as transitional arrangements toward a new deal. Barnier will brief EU ministers at their meeting on Monday in Brussels.

— With assistance by Alex Morales

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