Brussels seeks up to €60bn from Britain in hardline divorce settlement

The EU’s Brexit negotiators are pushing for a draft UK exit deal by mid 2018 as part of a narrow, divorce first negotiating approach that would demand an exit bill of €40bn ­ €60bn.

Brussels’ rigid plans for the process, outlined to the Financial Times by senior officials, show it is making a priority of a clean separation settlement ­ and Britain’s payment of a hefty exit charge over London’s desire to focus on refashioning trading relations.

Assuming Britain starts formal Article 50 divorce talks in March 2017, the EU aims to complete a draft exit deal by autumn 2018 at the latest, leaving at least six months to ratify and prepare for Britain’s full exit at a set date in 2019.

The European Commission recommends no detailed trade talks be carried out before a draft agreement on Article 50 but envisages transitional arrangements being tied to the exit deal.

Hard-line commission negotiators in Brussels see no option but to take a step ­by­ step approach to Brexit, moving from divorce to transition to a trade deal over a period of five or more years.

But some European officials fear that such a narrow agenda will significantly increase the risk of political breakdown and an unfriendly British exit without any withdrawal agreement.

“This is all very dangerous,” said one high ­level participant in talks.

Michel Barnier, the commission’s chief Brexit negotiator, has indicated to colleagues that he will pursue Britain for an exit bill based on an expansive view of its liabilities under the EU budget.

His team is looking at a gross upper estimate that includes unpaid budget commitments, pension liabilities, loan guarantees and spending on UK­-based projects. This would significantly exceed the FT’s estimates of a net bill of €20bn, which strips out UK­-bound spending and contingent liabilities.

The commission is also leaning towards assuming Britain remains on the hook for some of the EU’s long­-term budget beyond 2019 ­ planned spending that was promised to member states but not yet marked as a “commitment” in a budget year.

Taking account of these assumptions of liability, the commission’s opening demand on Britain’s gross bill would range from €40bn to €60bn, according to FT research.