ADVERTISEMENT

Germany Is Said to Want Brexit Progress as May Readies Offer

Germany Is Said to Want Brexit Progress as U.K. Prepares Offer

(Bloomberg) -- Germany is keen for Brexit talks to move on to the next phase as the European side wants two things for a breakthrough: a better offer on the divorce bill, and greater certainty that Theresa May can stay the course.

In Germany, there is political will for talks to move on to trade, according to a government official, even as Chancellor Angela Merkel is fighting for her own political survival. But a formal offer on the financial settlement needs to be made -- and in good time so it can be reviewed before the Dec. 14 summit of European Union leaders, the official said. 

Elsewhere in Europe, hope is also growing for a breakthrough next month, as the U.K. government indicates it will increase its financial offer as long as it gets something in return. One senior European official put the chances as high as 75 percent.

May is due to meet EU President Donald Tusk and possibly Merkel on Friday at a European gathering in Brussels, where she’s expected to keep arguing that both sides “should step forward together.” In other words, the U.K. will improve its offer on the bill only if the EU agrees to start trade talks at the same time. Political will is needed on the European side to make that choreography possible.

For May, the political risk of getting the sequencing wrong is huge. Plenty of lawmakers in her own party think the U.K. shouldn’t be paying anything as it leaves the bloc and voters aren’t keen either. May has already faced one attempted coup by unhappy lawmakers and there’s been a sense in London for months that she’s one crisis away from being toppled.

That is also giving the EU a pause, according to a person familiar with the discussions among the 27 governments. The bloc doesn’t want to approve an offer on the divorce bill, only to find May replaced by someone who has different ideas, the person said. That underlines how perilous May’s position is: presenting a firm offer on the bill and getting nothing in return is exactly the kind of thing that would weaken her. And her political survival is out of her hands.

On The Hook

With just 16 months to go until Britain leaves the bloc, talks are deadlocked mainly because of the financial settlement, and discussions of future trading terms or transition arrangements won’t even begin until the EU side is happy with the offer on the bill. Businesses are calling for urgent progress as they see the chances of a messy exit rising.

The EU has proposed more negotiations before the summit and, according to a U.K. government official, discussions are under way with a view to another round. Brexit Secretary David Davis said last week talks would be “pretty much continuous” until the summit.

While the EU doesn’t require a number for the bill, it’s demanding to know where the U.K. thinks it’s on the hook for the liabilities the bloc accrued while Britain was a member. May offered in September to make 20 billion euros ($23 billion) of budget payments for the two years after Brexit, and has since said her government is going through the other demands line by line.

The Financial Times reported that the government won’t put the improved offer to Brussels until Dec. 8, well after the deadline set by European officials, and just before the crunch summit on Dec. 14. That’s cutting it close, as the conclusions of such summits are usually drawn up in advance: EU ambassadors are due to draft the statements on Dec. 6.

But there’s a session of sherpas – the representatives of EU leaders – on Dec. 11 and the U.K. may be aiming to land its offer in time for this meeting. That would fit the U.K.’s long-held strategy of seeking to interact with leaders rather than the Commission.

--With assistance from Tim Ross Dara Doyle and Ian Wishart

To contact the reporters on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net, Ewa Krukowska in Brussels at ekrukowska@bloomberg.net, Brian Parkin in Berlin at bparkin@bloomberg.net.

To contact the editors responsible for this story: Heather Harris at hharris5@bloomberg.net, Emma Ross-Thomas, Nikos Chrysoloras

©2017 Bloomberg L.P.