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Brexit talks in 'disturbing deadlock' over divorce bill, says EU negotiator EU withdrawal bill debate postponed as Brexit talks hit buffers
(35 minutes later)
The Brexit negotiations are in a “very disturbing state of deadlock” over Britain’s divorce bill but decisive progress before Christmas is still within reach, the EU’s chief negotiator has said. Ministers have been forced to postpone next week’s debate on the EU withdrawal bill on a chaotic day that saw Michel Barnier warn of a “disturbing deadlock” in the divorce talks in Brussels and a growing whispering campaign against the chancellor in Westminster.
Michel Barnier told reporters during a joint press conference with the Brexit secretary, David Davis, that he would would not be able to recommend to EU27 leaders at a summit in Brussels next week that “sufficient progress” had been made to allow talks over future trade relations to begin. Andrea Leadsom, the leader of the House of Commons, told MPs the key piece of Brexit legislation would not be debated next week, as they had planned, as the government struggles to respond to a deluge of hostile amendments.
The main stumbling block continues to be the UK’s refusal to accept the EU’s analysis of what it will owe on leaving the bloc in March 2019, with Barnier saying at the end of the fifth round of talks that there was no question of him making “concessions”. Labour said it had identified more than a dozen of the 300 amendments that already have the backing of seven or more Tory MPs, theoretically enough to defeat the government.
Estimates on the size of the divorce bill have varied from around €60bn to €100bn (£54bn to £90bn). The growing scale of the parliamentary discontent underlines the challenge facing Theresa May, on a day in which the UK’s divorce talks were overshadowed by a series of developments:
Barnier acknowledged the momentum given to the talks by Theresa May’s speech in Florence, where she said the UK would pay about €20bn to ensure no member state would lose out in the two years directly after Brexit and would honour its existing financial commitments. Sterling fell sharply against the euro on the currency markets on Thursday lunchtime when Barnier, the EU’s chief negotiator, gave a sombre assessment of the status quo, warning of a “disturbing deadlock” in negotiations.
Philip Hammond came under fresh attack from pro-Brexit Conservatives on Thursday for what some regard as his pessimistic outlook, with former chancellor Lord Lawson calling on him to be reshuffled out of his job.
Christine Lagarde, the IMF’s managing director, said negotiators on both sides had to put the interests of people before those of business because the risks of not reaching a deal were unimaginable.
Labour seized on the disunity in Tory ranks and market uncertainty to say that Theresa May would struggle to pass her flagship EU withdrawal bill without making a series of concessions.
“The Tories’ repeal bill is simply not fit for purpose. It would give huge and unaccountable power to ministers and puts vital rights and protections at risk. Theresa May must start listening to the legitimate concerns of Labour and some of her own MPs and urgently change approach,” said shadow Brexit secretary Keir Starmer.
Barnier made clear on Thursday that he is not ready to recommend that talks on a future trading relationship begin now, as the UK had hoped.
The main stumbling block in Brussels continues to be the UK’s refusal to accept the EU’s analysis of what it will owe on leaving the bloc in March 2019, with Barnier saying at the end of the fifth round of talks that there was no question of him making “concessions”.
“This week, however, the UK repeated that it was still not ready to spell out these commitments,” Barnier said. “On this question, we have received a state of deadlock, which is very disturbing for thousands of project promoters and very disturbing also for taxpayers.”“This week, however, the UK repeated that it was still not ready to spell out these commitments,” Barnier said. “On this question, we have received a state of deadlock, which is very disturbing for thousands of project promoters and very disturbing also for taxpayers.”
In a further sign that the talks are on a knife-edge seven months into the two years allowed under the article 50 withdrawal process, Barnier said: “A no-deal will be a very bad deal and, to be clear, on our side we will be ready to face any eventualities and all the eventualities.” Nonetheless, David Davis insisted that Theresa May’s Florence speech provided a framework for talks to move on. “I make no secret of the fact that, to provide certainty, we must talk about the future,” he said.
The pound dropped almost a cent against the dollar, or 0.6%, to $1.3145, when Barnier announced that sufficient progress had not been made on the opening issues of citizens’ rights, the financial settlement and the Irish border. Estimates on the size of the divorce bill have varied from around €60bn to €100bn (£54bn to £90bn).
However, there were signs from both men that they believe EU leaders could break the current stalemate at next week’s European council summit, potentially by allowing Barnier to start scoping out how a transition period after March 2019 could work. However, the pound rallied in later trading after a leaked draft of the conclusions from next week’s European Council meeting, revealed that the EU27 could be prepared to start laying the groundwork for the next phase of talks to begin at he end of the year.
Davis said the UK’s understanding of what it would pay in the divorce bill “can only come later” but asked for leaders to seize the momentum provided by May’s speech. The document, seen by the Guardian, suggests the president of the European council, Donald Tusk, will invite Barnier, and its member states, to start drawing up a vision for the future trading relationship and the transition period in order to be ready for December, should sufficient progress have been made by then.
“I make no secret of the fact that, to provide certainty, we must talk about the future,” Davis said. “The prime minister’s speech set out the scale of our ambition for a deep and special partnership with the European Union and also laid out the case for a simple clear and time-limited period of implementation. I hope leaders of the 27 will provide Michel with the means to explore ways forward with us on that. Former chancellor Nigel Lawson called for Hammond to be reshuffled out of his job, telling the BBC’s Daily Politics that Hammond’s insistence he will not authorise spending immediately on preparing for a “no deal” Brexit, and his warning that talks could break down in acrimony, was “very close to sabotage”.
“As we look to the October council next week, I hope the member states will recognise the progress we’ve made and take a step forward in the spirit of the prime minister’s Florence speech.” Meanwhile, pro-Remain backbenchers continue to press privately for the foreign secretary, Boris Johnson, to be sacked. Johnson used a press conference with his Polish counterpart in London yesterday to urge the EU27 to press ahead to the next stage of negotiations.
Barnier said he remained “convinced today that with political will, decisive progress is within our grasp in the next two months”. “Let’s now get on with it to the next phase. I think that’s what we are saying. We are looking for some urgency from our friends and partners and it’s time I think to put a bit of a tiger in the tank and get this thing done.”
“Slowly but surely over the next few weeks I will explore the way forward. I will explore ways to get out of this deadlock we find ourselves in,” he said. “We are in a deadlock at the moment but I am sure that with the necessary will and on the basis of the commitments entered into by Theresa May in Florence we can find a way out of the deadlock.” Hammond flew to Washington on Thursday for the annual meetings of the International Monetary Fund, which kicked off with a warning from managing director Christine Lagarde of the risks of Britain leaving the EU without a deal. Lagarde said negotiators had to put the interests of people before those of business and there was a need to end uncertainty.
EU sources said there remained potential for the council to allow Barnier to scope out some of the details of a transition period and a vision of the future with the 27 member states. Asked what she thought would be the impact on Europe of Britain falling back on World Trade Organisation rules, he said: “I just cannot imagine that that will happen because for the people themselves what does it mean? The Europeans who are based in the UK and the British who are residing in the EU. WTO does not provide for such eventualities.
One senior diplomat said there had been limited room for progress in the latest negotiating round: “I think [this week] was more about parking the car without scratching the paint or bursting a tyre.” “When I think of the airline industries, the landing rights in various European countries There is so much that has been brought together between the continent and the UK that it requires a very specific approach that will reduce the uncertainty that is damaging potential.”
A senior British official described Barnier’s suggestion that the talks were in “deadlock” as an “elegant cry for help” to EU leaders to widen his mandate for the negotiations. The IMF considers a cliff-edge Brexit to be one of the main risks to what Lagarde called a fragile recovery in the global economy.
On citizens’ rights, Davis sounded an optimistic note, saying the latest round of talks had brought “the two sides even closer” to give legal certainty to the 3.5 million EU nationals in the UK and 1 million Britons in the rest of the EU. Labour leader Jeremy Corbyn, speaking on a visit to Shipley, in Yorkshire, condemned the government’s handling of the talks yesterday. “The danger is we will get to March 2019 with no deal, we fall out of the EU, we go on to World Trade Organisation rules and there will be threats to a lot of jobs all across Britain,” he said. “I think it is quite shocking. We are now 15 months on since the referendum and the government seems to have reached deadlock at every stage.”
Barnier sounded more cautious, highlighting stubborn disagreements on family reunification and the export of social security benefits after Brexit. Brussels wants to ensure EU nationals living in the UK retain existing rights to bring parents to live with them and take disability pensions abroad, while the British government would like to change the rules after Brexit. Many Conservative MPs only backed the second reading of the EU (withdrawal) bvill earlier this year because the government was clear that it was prepared to make concessions. That could mean ministers signalling their backing for select rebel amendments, or tabling their own.
The UK side has been frustrated by the EU’s refusal to guarantee onward movement rights for British nationals, meaning, for example, a Briton in Germany would be locked into that country, without the right to move to another EU state. Barnier said the issue remained on the table to be discussed at “the appropriate time” without spelling out when that might be. The amendments on which the government is at risk of defeat cover a range of topics such as limiting the scope of the government’s “Henry VIII” powers, and stopping ministers from switching Brexit day. Some amendments may gather more support by the time the bill reaches its committee stage the next hurdle, which is expected to involve at least eight days of painstaking debate on the floor of the Commons.
Overshadowing an agreement on citizens’ rights is the status of the European court of justice. Behind the scenes, halting progress is being made despite bellicose warnings from Tory backbenchers.
The UK conceded last month that European law could take “direct effect”, allowing EU nationals in Britain to cite European law in any legal dispute. But the EU continues to press for guarantees about what this means in practice.
Davis said he had drawn up a written statement for EU27 diplomats setting out further details. “We want to reassure those European citizens living in the UK that their rights and status would be enshrined in UK law,” he said. In a bid to assuage concerns over the 85-page forms EU nationals must complete to acquire permanent residence, Davis said there would be a “completely new, streamlined low-cost” registration process.
On the consequences of Brexit for Northern Ireland, Barnier and Davis said agreement had been reached on the continuation of the common travel area. They both added, however, that there was more work to do.