Michel Barnier, the European chief Brexit negotiator, has said he expects to announce to the EU within days that an agreement on financial issues has been reached with Britain.



“We are working really, really hard on these subjects,” Barnier told the Berlin Security Conference, adding when the European council meets in two weeks’ time, “I hope that I can report that ... we have been able to negotiate a deal and that we have reached a very important step in our relationship.”

However, he dismissed as rumours press reports that a final divorce bill figure had been agreed. “There is a subject on which we are continuing to work, despite the claims or rumours in the press today, that’s the issue of financial engagements,” he said.

In a second speech in Berlin, he also warned German businesses they should prepare for a scenario where there was no deal between the EU and UK. “The ‘no deal’ scenario is not our scenario. But since it cannot be ruled out, we have to prepare for it,” he told the German Employers’ Association.

The British and EU negotiating teams believe they have reached broad agreement on the methodology behind Britain’s estimated £50bn divorce bill, as reported by the Guardian.

Quick guide What is the EU withdrawal bill? Show Hide What is the EU withdrawal bill? The EU Withdrawal Bill – once known as the Great Repeal Bill – is going through the House of Commons to repeal the 1972 European Communities Act and transpose all existing EU legislation into domestic UK law, which will avoid a 'cliff-edge' change on the day after we leave the EU. Parts of the bill have been highly controversial, and MPs have tabled hundreds of amendments to try and change its wording, including a significant number of Conservative rebels. Some of the key controversies include its use of so-called Henry VIII powers, which will give government ministers the power to tweak the wording of laws to make sure they make sense in UK legislation - but those changes could take place without having to go through parliament. MPs have called this a "power grab" by the government. The government estimates around 800 to 1,000 measures called statutory instruments will be required to make sure the bill is applied correctly. Other concerns include the government's decision not to include the EU charter of fundamental rights in the law being transposed. Other amendments are attempts to affect the Brexit process, including legislating for a transitional period and giving MPs a binding meaningful vote on the deal secured by Theresa May, before the deal is finalised.

Diplomats in Brussels, attached to the member states, have been asked to assemble at a meeting on Friday to take the first step in scrutinising the British proposal under which the government accepts there are potential gross liabilities of around £89bn to meet in respect of commitments made during the UK’s 44-year membership.

Downing Street hopes that thefinal net divorce bill, once payments that would have been made to the UK are taken out, and final costs on long term commitments are clearer, will come to half of that amount.

A joint statement between the UK and commission is expected to be presented to member states for diplomats and leaders to examine over the weekend, ahead of a working lunch on Monday between Theresa May and the president of the European commission, Jean-Claude Juncker.

The British methodology for the divorce bill has yet to be shared with EU ambassadors and capitals, however, and the understanding between the British and EU negotiating teams has not been spelled out on paper for them to scrutinise.

Brexit talks: where does the €60bn offer leave the negotiations? Read more

The divorce bill payments will be paid over many decades, ensuring that the final sum will probably be shrouded in mystery.

In his speech to defence experts, Barnier evoked the “great shock” of the British vote to leave the EU, noting that it came after a series of attacks on European soil and an appeal from France’s then foreign minister, Jean-Yves Le Drian, for European countries to show solidarity in the fight against Isis, following the Paris attacks.

“Never had the need to be together, to protect ourselves together, to act together been so strong, so manifest. Yet rather than stay shoulder to shoulder with the union, the British chose to be on their own again,” Barnier said, according to the English transcript of his speech.

His remarks sparked anger among UK officials, with one anonymous source telling Politico the comments were “irrational and stupid”.

The UK is desperate to move the talks on to issues relating to trade and a future transition period but has faced strong resistance from Germany and France, which want Downing Street’s position on the divorce bill put in writing.

The financial settlement is one of the three opening issues alongside citizens’ rights and the Irish border, on which “sufficient progress” must be made before the talks can widen.

The issue of avoiding a hard border between the Republic of Ireland and Northern Ireland has become the major sticking point. Dublin has sought clearer assurances that a hard border will not be necessary from London, and has suggested that Northern Ireland in effect stays within the single market and customs union, a proposal dismissed by Downing Street.

In a letter to Barnier, sent on behalf of the European parliament’s Brexit steering group on Wednesday, its coordinator, Guy Verhofstadt, insisted that Britain should guarantee “regulatory alignment” in the north and south to avoid a hard border, and that this commitment should be enshrined “in the withdrawal agreement” struck between the UK and EU.

Verhofstadt, a former Belgian prime minister, also warned that the parliament, which will have a veto on any deal, has concerns that progress on the issue of citizens rights has “stalled or even reversed” in recent weeks, and insists the European court of Justice “must remain the sole and competent authority for interpreting and enforcing European Union law”.

It is understood the British negotiators have backtracked on an initial suggestion that British judges would be able to voluntarily refer their cases to the European court of Justice if a query arose on a point of law that has not previously been addressed during the UK’s time as a member state.

The parliament also wants to ensure that there are no costs to EU nationals who want to apply for settled status in the UK, and that children born after Brexit to families now in the UK will fully benefit from the terms of the withdrawal agreement.

In Berlin, Barnier offered rare psychological insight into the way he viewed the Brexit negotiations, which he said were keeping him busy “both day and night”, emphasising his wish for them to be as constructive as possible despite reports to the contrary.

“We have to conduct this debate with common sense (and) prudently, without being naïve … or aggressive. There should be no room for schadenfreude,” he added.

“Of course, I’m not driven by the idea of taking revenge but I’m conducting these negotiations with a view to striking a deal with Great Britain and not against it. I know that this decision is tantamount to a divorce, but a future partnership can be a very solid one.”

He stressed that all 28 EU members “wish for an orderly withdrawal”, but that it “takes two to tango”.

However, Barnier added that he soon expected “sufficient progress to be made on three main points”, namely finances, the Irish border and the rights of EU citizens.

He told the conference room of international military top brass that despite continued exchanges on intelligence and security issues, once it was no longer an EU member Britain would “have to withdraw its influence” over EU defence and security policy.

He acknowledged that Britain had never shown much enthusiasm for the drive for tighter military cooperation within the EU remit. “Britain has certainly not been spearheading the effort when it comes to defending Europe,” he said, calling its contribution to joint operations “rather modest”.

However, he said security and defence matters should not be compromised and he hoped they would form one of the main pillars of the EU’s future partnership with the UK.

“History teaches us there should be no horse-trading in Europe when it comes to security and defence questions,” he said.