On March 29th 2017 Theresa May, the UK prime minister, implemented the result of the UK's EU referendum, held in June 2016, and invoked Article 50 of the Treaty on European Union, giving formal notification of the UK's intention to withdraw from the bloc.

Formal negotiations on the terms of the UK's withdrawal will begin once the EU27 responds to the Article 50 letter (containing the UK's priorities for the talks) with its own set of negotiating demands.

Most member states share the view that the UK's withdrawal must be costly, and must lead to a trade arrangement that is inferior to membership. This means that compromises on the UK's Brexit bill and the four fundamental freedoms will be red lines for many in the negotiations.

Member states that have the most to lose from looser trade, investment and security ties with the UK are likely to take a softer stance on these contentious issues. Internal discord on these topics could weaken the EU's negotiating hand.

However, even among the UK's allies, there is likely to be a limit to how far they will go to support UK interests, and they are unlikely to risk undermining EU cohesion.

In the Article 50 letter, Mrs May outlined the UK's priorities in the forthcoming negotiations over the terms of its exit from the EU. The remaining 27 member states will seek agreement on a common negotiating position during April, after which formal negotiations can begin. The challenge for the EU will be to establish common objectives among all 27 members and maintain a united front in the negotiations.

First-round issues

This may be easier in the early part of the negotiations. There appears to be agreement across the EU27 that the UK's withdrawal must be perceived to be costly, and must lead to a trade arrangement that is inferior to full membership. For this reason, the UK's share of EU financial liabilities will probably be the first red line in the negotiations, with the EU likely to insist that this issue is settled before talks on any other areas (not least trade) can get under way. Germany, France and Austria can be expected to be uncompromising in early discussions on the "Brexit bill" that the EU will ask the UK to pay to cover existing and future financial commitments. Estimates range from around €24bn to €73bn, with Michel Barnier, who will lead the European Commission negotiating team, reportedly saying that the UK's bill will be between €40bn and €60bn. The EU's concern is that if the agreed bill is too low, it could reduce the perceived downside risk of withdrawal, encouraging anti-EU sentiment elsewhere in the bloc.

For other countries, the UK's Brexit bill will be a red line for practical reasons. Countries in eastern Europe, particularly those in receipt of EU development funds (of which Poland is the largest recipient), can be expected to resist an attempt by the UK to reduce its Brexit bill by cutting its aid commitments. Net contributors to the budget (Germany, France, the Netherlands, Italy, Sweden, Belgium, Austria, Denmark and Finland) are also likely to take an uncompromising stance in talks on the Brexit bill because they face the prospect of shouldering a greater share of future liabilities. This is particularly true of Finland, which opposed a third bail-out deal for Greece, but is now having to pay for it; Finland also has concerns that a low Brexit bill for the UK would fuel domestic anti-EU sentiment.

Another issue that will have to be settled early on is that of guarantees for the status of EU citizens in the UK, and for UK citizens in the EU. In Spain, somewhere between 300,000 and 1m UK citizens are residents, and one in five tourists come from the UK. Countries that want to secure the right of their citizens to work and study in the UK include Poland (around 900,000 of its citizens currently reside in the UK), Italy (600,000), Ireland (400,000), France (300,000), Romania (280,000), Spain (200,000), Portugal (90,000), Bulgaria (70,000), Greece, Hungary, Cyprus, the Czech Republic, Croatia, Lithuania and Latvia (although Poland and France have also welcomed the return of some of their citizens following Brexit, with Poland's government expecting this to boost the domestic labour market). With 1.2m UK citizens currently resident in the EU, these guarantees should be relatively easy to agree on both sides, assuming they are equivalent.

Cherry picking

Any attempt to compromise on the four EU freedoms—free movement of goods, capital, services and people—will be another red line. On this issue, most EU member states appear to be aligned. The founding members of the European project—Belgium, France, Italy, Luxembourg, the Netherlands and Germany—will take a hard line here, having consistently said that there will be no "cherry picking" from the four freedoms. Many other member states, including Austria, Finland, Spain and Portugal, have also implied in recent commentary that the trade-off between access to the single market in a new trade arrangement and migration restrictions will be strict.

There is a high risk that the talks will break down on this point. Placing restrictions on EU migration is a politically important objective for the UK in the negotiations, and should be more straightforward to achieve now that the country has decided to leave the single market. However, the EU27's argument is that opting back in, even to certain areas of the single market under a new trade arrangement, should prevent the UK imposing limits on immigration. Member states with substantial trade and investment ties to the UK, and which have the most to lose from a disorderly Brexit, have an incentive to take a softer position on this point and find an acceptable compromise.

Economic incentives to take a softer stance

The UK is the second-largest export market (goods) for Ireland and Poland, which sold 13.6% and 6.7% respectively of their total goods exports to the UK in 2015. The countries for which the UK is the third-largest export market are the Netherlands (where the UK accounted for 11.2% of total exports in 2015), Germany (7.5%), Spain (7.5%) and Cyprus (6.9%). The UK is the fourth-largest export market for Belgium, Sweden, Portugal, Luxembourg, Italy and the Czech Republic, accounting for 5‑9% of total exports in each country. Meanwhile, the vast majority of the EU27 countries run a trade surplus (goods and services) with the UK. Ireland is one exception, but largely because the value of imports it purchases from the UK is also substantial, demonstrating how closely integrated the two economies are. For Hungary, Belgium, the Czech Republic, Poland, the Netherlands, Germany, Portugal, Spain and the Baltic States, their trade surpluses with the UK account for 1% of GDP or more.

These countries may therefore be supportive voices for the UK in the negotiations, and some have signalled this, notably Spain (albeit conditional on an agreement relating to Gibraltar). Significant foreign direct investment in the UK or close links to its banking sector may also provide an incentive for Cyprus, France, Belgium, the Netherlands, Germany, Finland, Greece and Spain to take a softer line on the most contentious issues, although for the founding members, protecting the interests of the EU is likely to be the priority. For Germany in particular, protecting the future cohesion and stability of the EU will trump a softly-softly approach on trade or other issues.

Special concerns

As well as economic ties, there are a range of other issues that will give some member states a reason to support UK interests in the negotiations. The Nordic and Baltic states and Poland are concerned that security guarantees from the EU could be imperilled by looser ties with the UK. Fearing that Russia might lash out and worried about US support for NATO under the presidency of Donald Trump, these countries will be keen to continue security co-operation with the UK, the EU's pre-eminent defence power. Neither Sweden nor Finland are militarily aligned, and although both countries are members of NATO's Partnership for Peace, they depend on bilateral defence agreements, including a Nordic Defence Co-operation pact, and security protections offered by the EU.

Estonia, Latvia, Lithuania and Poland have voiced concerns about losing the UK's involvement in European security policy, particularly given the UK's military presence in these countries as part of NATO's effort to build up forces in the area. Moreover, once the UK leaves the EU, France will be the only remaining standing member of the UN Security Council in the bloc, and the only nuclear power. France is therefore also likely to want to maintain close ties with the UK on defence after Brexit, and may take the lead on EU defence negotiations, as this is one area in which it is the stronger partner in the Franco-German relationship.

A concern for Spain is that a bad deal for the UK could boost pro-independence voices within the country, with implications for Scotland in particular. This could create problems within Spain, where the government is dealing with the Catalan question and possibly another independence referendum in September 2017. Meanwhile, with the UK considering withdrawing from the customs union unless it can arrange some sort of partial membership that would allow it to strike trade deals with non-EU countries, the Republic of Ireland will be pushing to avoid the return of a "hard" border with Northern Ireland that would stymie trade, and potentially damage the political settlement reached in the north.

The ultimate red line: EU cohesion

For almost all member states, a low-cost Brexit and compromises on the four freedoms represent red lines in the negotiations. But for the countries keen to preserve EU-UK ties in trade, investment and defence co-operation, these red lines are slightly blurred, in the sense that they may be willing to support the UK's push for a Brexit bill towards the lower end of the range of estimates, and may be amenable to finding a compromise on the single market-no free movement trade-off. There is therefore the potential for internal discord among the EU27, weakening the bloc's negotiating hand.

At the same time, however, the UK is short of political capital in the EU, and many national governments would face internal political resistance to a clearly pro-UK position. Recent commentary suggests that there will be a limit to how far even the UK's traditional allies will go to support its position, and it is unlikely that any country will risk undermining cohesion within the EU. This is true for Spain and the UK's allies in northern Europe—Sweden, the Netherlands, Denmark and Finland, who have tended to vote alongside the UK, and fear a shift in the balance of power towards the more protectionist states of southern Europe, such as France and Italy. The overriding concern is that an agreement that either favours British interests too strongly, or appears to undermine the EU, could boost anti-EU sentiment, causing further domestic political disruption.