U.K. and EU Edge Toward Brexit Deal as Ireland Is Final Hurdle

  • Negotiators said to have agreed outline deal on divorce bill
  • Ireland’s EU commissioner predicts movement in coming days
U.K.,EU Agree to Brexit Divorce Bill

U.K. and the European Union negotiators reached an outline deal on the Brexit divorce bill, clearing an obstacle to talks, and Ireland’s European commissioner predicted that a breakthrough on the sensitive Irish border issue could soon follow.

Michel Barnier in Berlin on Nov. 29.

Photographer: John MacDougall/AFP via Getty Images

Negotiators reached a preliminary agreement on the financial settlement, which still needs to go to national governments for approval, according to a person familiar with the situation. Ireland’s EU Commissioner Phil Hogan predicted another breakthrough may be imminent, which would allow long deadlocked talks to move on to the future relationship between the two trading partners.

“In the same way as we have seen movement in the last 24 hours in relation to the financial settlement, I expect that we will see movement in this regard in the next few days as well,” he told reporters in Brussels on Wednesday. “And hopefully we will.”

The pound surged on the prospect of a breakthrough in separation talks, which have shown little progress for months. Businesses are desperate for negotiations to start on the transition deal that Britain wants to put in place after Brexit and also for talks to get going on trade -- where the real fight begins.

Irish Riddle

Prime Minister Theresa May said she’s talking to Ireland and the Northern Irish party that props up her government with a view to reaching a compromise on what the border running through the island of Ireland should look like after the divorce. 

“We’re all of one view that we don’t want to see –- that’s the parties in Northern Ireland, the Irish government, the U.K. government -- that we don’t want to see a hard border,” May told reporters on the plane to Amman, Jordan, as she began a two-day visit to the Middle East. “There are a number of ways in which we can ensure that for the future and look forward to having more detailed discussions on that as we move into phase two of the negotiations.”

The pound rose and gilts slumped as investors brought forward their expectations for the next interest-rate increase from the Bank of England. Sterling strengthened to $1.34.

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. But 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.

Why Ireland’s Border Is Brexit’s Stubborn Puzzle: QuickTake Q&A

While the EU proposes Northern Ireland should keep its regulation the same as that of Ireland after the split so there’s no need for a border, that would create a barrier between Northern Ireland and mainland Britain, which is a red line for the DUP.

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. Prime Minister Leo Varadkar said the situation is “rapidly evolving.”

May is due to meet European Commission President Jean-Claude Juncker on Monday for lunch when she’s expected to present the formal offer on the bill and Ireland. If EU governments accept it, the next step is for them to declare at their Dec. 14 summit that talks can now start on the future relationship between Britain and its biggest trading partner.

Tabloid Reaction

At home, May can at least take comfort from the fact the response to the news of an agreement on the bill has been muted. The tabloid press that loves to loathe the EU was distracted with news of Prince Harry’s wedding, and Conservative Brexit-backers kept a low profile. That’s crucial for May’s chances of clinching a deal at the summit.

Chief negotiator Michel Barnier was cautiously optimistic.

"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," he said in Berlin. “We are not there yet.”

— With assistance by Thomas Penny, Peter Flanagan, and Patrick Donahue

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