U.K. and EU Agree on Outline Brexit Bill as Irish Block RemainsBy and
Negotiators said to have agreed outline deal on divorce bill
Thorny question of Irish border still remains to be solved
U.K. and the European Union negotiators reached an outline deal on the Brexit divorce bill, clearing a hurdle in negotiations and ramping up pressure to find a compromise on the thorny issue of the Irish border. The pound surged.
Negotiators reached a preliminary agreement on the bill that still needs to go to national governments for approval, according to a person familiar with the situation. It’s up to EU leaders to accept the offer or not and they will do that in the run-up to a summit in mid-December. The U.K. government said “intensive talks” are ongoing to “build on recent momentum.”
For months, talks have been all but deadlocked over separation issues, meaning negotiations haven’t even started on the crucial terms of trade that will apply when Britain leaves in just 16 months time. Progress on the money leaves one major outstanding issue to be settled before talks can move on to trade: the politically sensitive Irish border. The U.K. has until Monday to come forward with a proposal for how a hard frontier can be avoided on the island of Ireland when it becomes home to the U.K.’s new land border with the EU.
"I hope I can report to the European Council that in the meeting we have been able to negotiate that deal -- and that we have reached a very important step in our relations, if we find this very important point in the agreement in the next days," chief EU negotiator Michel Barnier told a conference in Berlin. “We are not there yet.”
Prime Minister Theresa May and European Commission President Jean-Claude Juncker are scheduled to meet Monday for a lunch where she’s expected to present the formal offer. If EU governments accept, the next step is for them to declare at the Dec. 14 summit talks can now start on the future relationship between Britain and its biggest trading partner. Businesses are desperate for talks to start on the transition period that Britain wants to put in place after the split, and also want to see talks get going on the trade deal -- where the real fights will be seen.
The pound strengthened as much as 0.7 percent, shares in U.K. banks rallied and bonds fell.
Avoiding a Number
The divorce bill is a result of budget payments the U.K. signed up to while a EU member as well as other liabilities such as pensions that stretch into the future. The EU was asking for at least 60 billion euros ($71 billion) and EU officials have long said that any final number would be camouflaged to help the U.K. government sell the unpopular settlement to skeptical voters. Transport Secretary Chris Grayling said on Wednesday the government hasn’t “committed to numbers," and no final deal has been reached.
The Financial Times reported that Britain accepted total liabilities of as much as 100 billion euros, but aims to pay half of that and spread it over many years, or decades in the case of pension payments.
While settling the bill is unpopular with voters and rejected by some members of May’s own party, the Irish border issue is even more sensitive and will require political will and trust on all sides.
Ireland, which essentially has a veto at this stage of talks, wants to avoid any kind of border on the island after Brexit and the European Commission is backing its stance. A policed frontier and customs controls will be needed somewhere, as the U.K. is leaving the single European market that allows the border now to be almost invisible. A return to checkpoints would stir memories of decades of violence and also harm the island’s economy.
Irish Foreign Minister Simon Coveney said U.K. and EU teams are discussing possible wording of a commitment on the border issue that would allow talks to move forward to trade. Irish Europe Affairs Minister Helen McEntee said on Wednesday Ireland doesn’t want to be obstructive but there needs to be an agreement on the border issue and she hasn’t yet seen the wording on guarantees.
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May has to come up with a solution that’s acceptable to Dublin but also to the Northern Irish DUP party whose votes she needs in Parliament to govern.
Ireland would like the north to keep the same rules as the Republic after Brexit, but that would inevitably mean setting up a border between Northern Ireland and mainland Britain. The DUP’s raison d’etre is keeping Northern Ireland integrated in the U.K., and it rejects any kind of arrangement that would separate it from the mainland.
— With assistance by Thomas Penny, Peter Flanagan, and Patrick Donahue