Britain appeals to EU for softer line on Brexit

David Davis, left, has asked European leaders to give Michel Barrnier more leeway so agreement can be reached © EPA

Britain made a high-stakes appeal for EU leaders to relax their stance on Brexit on Thursday as the union’s chief negotiator warned that divorce talks were so deadlocked it would take months before trade discussions begin.

After a fifth round of discussions that ended with no significant advances, Michel Barnier, the EU’s lead negotiator, said he would not tell EU leaders at a summit next Thursday that there was “sufficient progress” to move on.

“We have reached a state of deadlock,” Mr Barnier said, emphasising the stalled talks over a financial settlement. “This is very disturbing.” But he said “decisive progress” could be made by December if London showed “political will”.

Investors reacted promptly, pushing the pound markedly lower. Sterling dropped about 0.6 per cent against the dollar, to $1.3145, and a euro was worth 90p for the first time since mid-September.

David Davis, the UK’s Brexit secretary, made several direct calls for EU leaders to revise Mr Barnier’s mandate to allow him to “explore ways forward”, notably on a transition period. “To provide certainty we must talk about the future,” he said.

“Clearly we would like them to give Michel the means to broaden the negotiation,” he added. Such an outcome was the “most important thing” at the summit.

The appeal raises the stakes before next week’s leaders’ gathering. London is betting it can convince Germany and France to ease their strict approach to barring discussions about the future relationship or a transition until divorce issues are settled.

Several EU diplomats warned the UK tactic could easily backfire. “This was not wise,” said one.

Mr Barnier has privately expressed his openness to using informal transition talks to create space for a divorce deal, with the UK settling its bills in conjunction with the EU offering guarantees on a status quo transition after 2019.

But the option of exploratory transition talks was rejected by Berlin and Paris. Instead the union is preparing to approve internal “scoping” work between the 27, to prepare detailed positions on transition and possibly on a future trade deal ahead of negotiations on such issues with the UK.

Some member states, including Ireland, the Netherlands, Sweden and the Czech Republic, are more sympathetic to beginning transition talks but would not want to break EU27 unity. Diplomats said it made for an unpredictable summit discussion.

While some diplomats involved in preparations believe Angela Merkel, the German chancellor, will hold firm, others suspect the hardball tactics may be a way to lower expectations ahead of a summit that could involve more movement.

Mr Barnier stressed his role was to “find a way to progress” but he was willing to discuss a wider mandate only “at an appropriate time”. He added: “Now is not that time,” warning there would be risks to “mixing everything up”.

British negotiators are frustrated the EU has in effect “banked” the concessions made by Theresa May in Florence last month. In a set-piece speech, the UK prime minister promised to honour the financial commitments the country has made as a member and remain in the bloc in all but name until 2021.

London is particularly upset that the EU is in effect calling for a second big set of concessions to close a deal — which may be impossible given political constraints in Westminster.

The EU in turn wants Britain to clarify the ambiguities in Mrs May’s speech, particularly over its financial commitments.

It is unclear whether the standstill in the fifth round of talks, which made no substantial progress on the financial settlement or citizen rights, will help or hinder Britain’s case at the summit.

Talks this week centred on the rights of citizens and the two sides were unable to narrow differences over the role of European courts, the family reunion rights of EU nationals in Britain, or the ability to claim social benefits from outside the UK.

Although there were sessions to discuss a financial settlement, these were primarily technical and Britain offered no more clarity on the pledge to honour its “commitments” beyond 2020. “Therefore there was no negotiation on this, but we did have discussions which were useful, albeit technical,” Mr Barnier said.

The stalled negotiations were held amid a darkening mood in Westminster and Brussels, with growing concern the two sides may be headed for a hostile parting, particularly if a deal is not possible by December.

Asked about the possibility of no deal, Mr Davis said the UK was aiming for an agreement but the “government has to be ready for the alternatives”.

“The UK is planning for all outcomes . . . however improbable,” he said. “Wherever money needs to be spent it will be spent.”

Playing on Mrs May’s assertion that no deal would be better than a bad deal, Mr Barnier said: “No deal would be a very bad deal” for Britain.

Additional reporting by Roger Blitz in London

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