EU rules out UK trade talks before Brexit payment deal

European Union (EU) officials are ruling out any discussions with UK Prime Minister Theresa May over a post-Brexit trade deal until she agrees to settle Britain’s financial commitments to the bloc.

In a sign the EU is toughening its stance as Britain prepares to trigger two years of negotiations, two European officials familiar with the plan said in the best case scenario it may take until early 2018 to find common ground on the bill. The EU is determined to set its own pace and may not even reveal the sum it wants the UK to pay until after German elections in September, one of the officials said.

The EU’s hard line increases the chances of the UK walking away from the Brexit talks without a deal or even before the sides turn to the matter of a trade pact. May’s government has already questioned the size and legality of any exit fee and wants to prefer to discuss the divorce and future trading relationship at the same time.

The bill to settle the UK’s liabilities is estimated to run to about ^60 billion ($64.5 billion). UK Foreign Secretary Boris Johnson told the BBC this week that “it is not reasonable, I don’t think, for the UK having left the EU, to continue to make vast budget payments.”

The UK’s EU counterparts will insist on concrete progress in the negotiations and acceptance of the bill over the initial nine months before opening the door to any planning of Britain’s post-Brexit commercial links to the bloc, both officials said.

The clock will start ticking on the two-year negotiation period as soon as May invokes Article 50 of the Lisbon Treaty, a step she’s pledged to take before the end of this month.

While some of the EU’s other 27 countries have come round to the UK’s way of thinking on the timetable, according to a third official, they probably don’t have sufficient influence to change the EU’s plans. The order of talks will be the first matter to be discussed when the two sides first engage.

Britain’s rejection of the bill is prompting the EU to tell companies to be prepared for business disruptions as a result of the possibility of a UK exit from the bloc without an agreement, according to one of the officials, who said the British government has given itself little room for compromises that would facilitate a Brexit accord.

The EU is confident that, in the event of a UK departure without a deal, European demands for the country to meet its financial commitments to the bloc would be legally solid and hold up in international courts, said the official, who signaled London would complicate post-Brexit life for itself by engaging in a legal battle over money while seeking to forge new economic relationships with the rest of the world.

Substantive talks won’t begin before May at the earliest, when EU member states sign off on a mandate for the EU’s chief negotiator Michel Barnier, and will take place in successive rounds in London and Brussels. The EU isn’t prepared to accelerate the process over the Easter break, after the UK has taken over nine months since the referendum to trigger Article 50, one of the officials said.