Price of divorce settlement continues to be main stumbling block as Brexit negotiations recommence, while Labour has change of heart on single market

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The big picture

Brexit negotiations resumed in Brussels this week and it doesn’t sound like they are going swimmingly.

No 10 insists early talks on post-Brexit trade deal are possible Read more

Jean-Claude Juncker, the European commission president, dismissed Britain’s position papers as unsatisfactory; the UK’s Brexit secretary, David Davis, demanded more “flexibility and imagination”; and the chief EU negotiator, Michel Barnier, said he was frankly “concerned” by the state of the talks:

We need UK positions on all separation issues. This is necessary to make sufficient progress. We must start negotiating seriously. We need UK papers that are clear in order to have constructive negotiations.

At the heart of the deadlock is the question of sequencing: the UK wants to move as quickly as possible to talks on a wider trade deal, while the EU insists that progress on three key divorce issues – citizens’ rights, the Irish border and the size of Britain’s exit bill – must be made first.



Juncker made this absolutely plain on Tuesday, reiterating that the bloc “will commence no negotiations on the new relationship ... before all these questions are resolved. First of all we settle the past before we look forward to the future.”

While Juncker said the flurry of UK position papers published last week had not “given me satisfaction”, they did shed some light on London’s evolving Brexit goals.

On trade standards and rules, the UK conceded – in the words of the justice minister Dominic Raab – that despite Theresa May’s stated aim of “taking back control” of British law, the government would surely end up having to keep “half an eye” on European court of justice rulings.



The government has also clarified that while it intends to leave the customs union, its objective is to secure a long-term agreement that as good as replicates the current arrangements – although how that could be achieved is anyone’s guess.

But Britain has so far said nothing about how much it might be prepared to pay in a divorce settlement, and appears to have no intention of doing so for the time being. Increasingly, the question of the Brexit bill is looking like the biggest single obstacle to the talks’ smooth progression.

The view from Europe

Any UK hope that the EU27 might be weakening in its collective resolve to resolve the key questions of the article 50 divorce before moving on to future trade were dashed when France strongly denied suggestions of a possible climbdown.

The Daily Telegraph reported that if the UK was prepared to pay €10bn (£9.25bn) a year into the EU budget during a three-year transitional period and continue to accept EU law, Paris would push for talks on a wider future trading arrangement to begin as early as October.

But an Élysée source poured cold water on the suggestion, which had surprised observers since France played a leading role in drawing up the EU negotiating mandate and Barnier is a former French government minister:

The allegations are not based on anything and don’t correspond to any reality … France fully supports, both in content and method, Michel Barnier’s negotiation mandate.

Meanwhile, back in Westminster

Until this week, Labour’s Brexit position could have been politely described as pragmatic ambiguity.

That ended this weekend after Keir Starmer said in the Observer that Labour wanted the UK to remain a member of the single market throughout an extended transition period, during which free movement, EU budget payments and the jurisdiction of the European court would all continue.

The shadow Brexit secretary also left the door open for single market membership to become a permanent state of affairs if the government could get some tighter immigration restrictions.



Play Video 1:11 Jeremy Corbyn: Brexit transitional deal is ‘important for jobs’ – video

This was a U-turn of some magnitude. Starmer said in April that single market membership was “incompatible with our clarity about the fact that freedom of movement rules have to change”, while Jeremy Corbyn sacked several frontbenchers in June for supporting a backbench Queen’s speech amendment on remaining in the single market.

Remain-supporting Labour MPs now want the party to commit to single market membership on a permanent basis at party conference, with an official campaign, Labour4singlemarket, launched by two prominent backbenchers, Alison McGovern and Heidi Alexander.

There is real concern, however, among MPs whose constituencies voted to leave across the north-east and the Midlands, many of whom went doorstep to doorstep during the election pledging the party would deliver the Brexit they had voted for.

One told the Guardian they foresaw huge damage to the party’s reputation outside major cities. “There aren’t enough metropolitan remain-type voters to win an election. There is real concern that we have misled voters.”

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Charles Grant, director of the Centre for European Reform, said in the Guardian that the sequencing problem (see above) can be fixed with “a bit of creativity and goodwill” from each side, but it will not be easy:

The real problem is that both teams of negotiators have to contend with hardliners in their own camps. May’s government is not yet ready to make a significant offer on money. Nor can the government agree on the kind of transition it wants. May seems to be taking her time to knock heads together (or to work out what she herself wants). And even if Britain were to make a generous offer in September, there would be no guarantee of a favourable response from Michel Barnier. Many governments will find it hard to compromise on money: Brexit means that net contributors will have to pay more into the EU budget, and net recipients are likely to receive less. In the long run, both sides’ moderates are likely to win. Otherwise there won’t be a deal, which would be bad for the EU (it would get no British money) and disastrous for the British economy. If May wishes to move the Brexit talks forward, to discuss the future relationship, she needs to back the realists in her cabinet and make some bold offers to encourage the more moderate EU governments.

Zoe Williams welcomed Keir Starmer’s statement on Labour’s single market policy, saying it had “wrested the Brexit debate from the Tories”:

This is by no means a blueprint for what a Labour negotiating position would look like, but it is the beginning of something vital: a clear set of differences between Labour Brexit and Conservative Brexit, without which Theresa May’s government has been hurtling cluelessly along, as unopposed and wild as a log crashing through a flume. In laying out a forthright and practical alternative to the Tories’ cliff-edge transition, Labour has effectively restored Brexit to the grasp of parliamentary politics, one in which MPs can vote as their reason and consciences determine. Where previously the plan swung like a pendulum between Tory factions, announced categorically one day and briefed against the next, it is now fixed. In seeking clarity for its own position, Labour has surely forced clarity from the government. The new distinction is not between hard Brexit and soft Brexit: it is between infantile Brexit and grownup Brexit.

Tweet of the week

David Schneider sees a parallel with the big sporting event of the week: