BREAKTHROUGH ON BREXIT BILL

Trade talks look set to begin amid claims EU ‘will accept’ £40bn offer

THERESA May’s Brexit bill gamble appeared to have paid off last night as EU sources indicated they were ready to strike a deal over money. Her Brexit war cabinet agreed to raise the UK’s divorce offer last week in a bid to break the deadlock preventing the start of trade talks.

The markets rallied following the news last night as sterling bounced back.

The Prime Minister’s divorce offer was controversial, with some Conservative MPs urging her to walk away rather than pay a bill that could top £40 billion.

But last night Brussels sources hinted that the offer would be enough to persuade the EU to sanction the start of trade talks at a crunch summit next month, provided agreement is also reached on citizens’ rights and the Northern Ireland border.

‘The deal on the money is there,’ said one source.

Reports last night claimed there had been an agreement in principle on the divorce bill following a private presentation on the Cabinet agreement by the UK’s top Brexit official Oliver Robbins last week.

Government sources denied a deal on the money had been struck and stressed that no figures had been discussed with Brussels. The UK’s improved offer is also contingent on the EU agreeing to a comprehensive trade deal. A final cash settlement will only be agreed at the end of the process when both sides can see the shape of the future relationship.

Mrs May is hoping the offer will trigger a breakthrough next month when EU leaders gather in Brussels to decide whether ‘sufficient progress’ has been made on divorce issues to allow talks to turn to trade.

But ministers remain concerned about progress on what will happen to the border in Ireland, where Dublin is making increasingly belligerent demands. A breakthrough on trade talks would ease Tory concern about the size of the divorce bill.

Former international development secretary Priti Patel this week said the PM should have told Brussels to ‘s** off’ rather than pay up.

But former Tory leader Iain Duncan Smith, who was also critical of increasing the offer, last night struck a conciliatory tone, saying: ‘I would be very happy if they get to a point where they have agreed and can get on to trade negotiations.’

Speaking in Australia yesterday, the International Trade Secretary Liam Fox also struck an upbeat note, saying: ‘We believe that we’ve gone far enough to be able to get into this second stage.’

The apparent breakthrough follows a stalemate in negotiations. EU sources last night claimed the UK had agreed to a formula that could see the final bill hit £53billion. But British sources suggested the settlement could be below £40 billion.

A final offer will be presented by the PM during a key lunch with European Commission president Jean-Claude Juncker next week.

After Mr Juncker and the EU’s chief negotiator Michel Barnier consider the offer, EU leaders will then decide whether to give the green light to trade talks at a summit in Brussels on December 14.

In an attempt to obscure the exact size of the bill, British officials are understood to have presented a complex payment method that will ensure the money is not paid off in one large sum.

Although the agreed methodology does not produce a specific figure, British sources last night said that it could result in a final payment in line with the £40billion (€45billion) offer that has been signed off by the Cabinet. One EU diplomat said: ‘As long as they agree to pay it, it does not matter whether there is a figure attached.’ Another told the Financial Times: ‘They have promised to cover it all, we don’t care what they say their estimate is.’

But a UK source close to the negotiations insisted that ‘nothing has been agreed’ even though the UK team had presented their proposals. They said: ‘These talks are ongoing and the idea that there is a number or an agreement is not right.’

Intense under-the-radar talks will continue between UK and EU officials. Soon after the breakthrough was announced, the pound recovered on currency markets.

Sterling spiked at $1.33 against the dollar as traders piled into the currency. It also closed above €1.12 against the euro.

‘They promised to cover it all’