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Two-year Brexit transition deal 'discussed at marathon Cabinet' Brexit: Theresa May 'to offer 20bn euro transitional deal'
(about 2 hours later)
Ministers have discussed the possibility of a transition deal with the EU of up to two years, a Cabinet source has told BBC News. Theresa May is set to propose a transitional deal with the EU of up to two years in a speech on Friday, a cabinet source has told BBC News.
Prime Minister Theresa May is also expected to make an "open and generous" cash offer to the rest of the EU in a bid to unblock Brexit talks. The PM is also expected to make an "open and generous" offer, potentially worth 20bn euros over the two years.
She will announce the details in a speech in Italy on Friday. It would mean the EU does not have to unpick its current budget - so no other EU member loses out from Brexit.
Mrs May briefed her top team on what she will say at a marathon two and a half hour Cabinet meeting. No 10 hopes the speech, which has been agreed by the cabinet but could yet be revised, will speed up Brexit talks.
Foreign Secretary Boris Johnson and Chancellor Philip Hammond - seen as being at opposing ends of cabinet views on Brexit - emerged from the meeting together in a show of unity for waiting reporters. Mrs May briefed her top team at a marathon two and a half hour cabinet meeting in Downing Street on what she will say in Florence.
BBC Political Editor Laura Kuenssberg said a source had told her there was broad agreement on the contents of the prime minister's speech. A government source said that the intention was to make the potential payments conditional on continued access to the single market and some form of customs union which allowed the UK to strike its own trade deals during the transition period, BBC political editor Laura Kuenssberg said.
Ministers were given copies of the draft speech to read for 30 minutes before the meeting got under way. Mrs May is not expected to say how much the cash offer will be worth, the exact nature of the arrangements for accessing the single market or any conditions attached to the money in her much-anticipated speech - these are subject to the negotiations in Brussels.
Although there could yet be some tweaks to the final offer to be made in Florence on Friday it is understood the prime minister is likely to rule out a loose "Canada style" trade deal as a model for the UK and EU, the source said. Additional long term liabilities, like EU pensions and debts, will also have to be dealt with in the talks to come, so the eventual Brexit bill is likely to be far higher than that £20bn or so.
But nor is she expected to advocate an "EEA minus" type of arrangement, which would not end free movement and retain many EU laws, as some Brexiteers have feared. But, Laura Kuenssberg says, it is hoped in government circles that the prime minister's offer could help overcome the current political blockage in the negotiations.
The Florence speech is being seen as an attempt to break the deadlock on the negotiations, with the EU unhappy at the lack of progress on agreeing the UK's "divorce bill" from Brussels. Mrs May is also expected to repeat her assertion that the UK will seek its own bespoke trade deal after Brexit with the rest of the EU.
Mrs May is thought likely to offer a guarantee that no EU country would lose out from changes to the EU's current budget as a result of the UK leaving. She is therefore likely to rule out seeking an equivalent to the Canada-style free trade deal, preferred by some Brexiteers, and an arrangement like the European Economic Area, where countries retain a full relationship with the single market but have to accept elements of the freedom of movement.
After a week of tensions on the issue of Brexit strategy the cabinet meeting to read and discuss the text of the draft speech ended with Foreign Secretary Boris Johnson and Chancellor Philip Hammond - seen as being at opposing ends of cabinet views on Brexit - emerging from No 10 in a show of unity for waiting reporters.
Debate ahead of the speech has focused on the detail of the time-limited transition period after Brexit, how much the UK will pay as it leaves, and whether it will continue contributing to EU budgets in years to come.Debate ahead of the speech has focused on the detail of the time-limited transition period after Brexit, how much the UK will pay as it leaves, and whether it will continue contributing to EU budgets in years to come.
So far, the government has said the UK will honour its commitments but that the days of "giving huge sums of money" are over.So far, the government has said the UK will honour its commitments but that the days of "giving huge sums of money" are over.
Downing Street has also described as "speculation" a Financial Times report that the top civil servant at the Brexit talks, Olly Robbins, who reports directly to Mrs May, had told Germany she will offer to pay £20bn in the period up to 2020 to cover gaps in the budget left by the UK's departure. In a speech to the Italian Parliament on Thursday, the EU's chief Brexit negotiator Michel Barnier said that striking a deal with the UK was "in our common interest" but that only a year remained to come to agreement on the key issues - as six months would be needed for ratification before March 2019.
Speaking in French, he said he was awaiting "clear commitments" from the UK on the issue of guaranteeing EU citizens' rights in the UK, on the financial settlement and on the Northern Ireland border. Without those issues being resolved in a withdrawal agreement, there would be no transition deal, he said.
"I am convinced that a rapid agreement on the conditions of the UK's orderly withdrawal, and a transition period, is possible. For that to happen, we would like the United Kingdom to put on the table, as soon as next week, proposals to overcome the barriers."
The fourth round of Brexit negotiations begins on 25 September, with the UK due to leave the EU in March 2019.The fourth round of Brexit negotiations begins on 25 September, with the UK due to leave the EU in March 2019.
Analysis - By BBC Political Editor Laura Kuenssberg
We are one of the biggest contributors to the EU pot, so leaving dents the planned financial arrangements if we just go and take our cheque book with us.
If that is the promise that is roughly to the tune of £20bn, although it would be surprising if Theresa May named a figure herself - it's not her style and any actual numbers will be subject to far-off negotiations.
But in terms of the bill, that could just be the start of it. Plugging the hole in the current budget doesn't deal with what the EU sees as our long-term obligations - whether that's diplomats' pensions or our share of money that's been loaned to other countries.
Read Laura's full blog
The UK is keen to intensify the pace of the talks and open discussions on the country's future relationship with the EU, including trade, as soon as possible.
But this cannot happen until the EU deems sufficient progress has been made on the initial subjects being discussed, including the UK's financial settlement.
The two sides are also trying to reach agreement on the status of UK and EU expats after Brexit, and the impact of Brexit on the Northern Ireland border.
The pro-European Liberal Democrats called on Mrs May to clamp down on Cabinet dissent by sacking Boris Johnson and to use her Florence speech to "drop her reckless insistence that no deal is better than a bad deal".
The party's Brexit spokesman Tom Brake said: "This a chance for the prime minister to show she's listened to the message sent by voters at the election and to seek a Brexit deal that has majority support in the country.
"That should include staying in the single market, separating the issue of EU nationals' rights so they are not used as bargaining chips, and giving the public a vote on the final deal."