Lower Brexit divorce bill of up to £39 billion as Theresa May gets breakthrough

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The UK will pay a financial settlement estimated at up to £39 billion as it leaves the European Union, a senior British source has revealed.

The size of the so-called “divorce bill” emerged after European Commission president Jean-Claude Juncker announced that he is recommending leaders of the remaining 27 EU states give a green light to the start of trade talks next Thursday.

Britain's Prime Minister Theresa May leaves 10 Downing Street. Picture: Getty Images.

Britain's Prime Minister Theresa May leaves 10 Downing Street. Picture: Getty Images.

The breakthrough was hailed by Prime Minister Theresa May as “a hard-won agreement in all our interests”.

The agreed settlement payout for Britain is believed to be between £35bn and £39bn.

The estimated Brexit bill is significantly lower than suggested by previous leaks, which put it at £50bn or more.

It covers Britain’s share of the EU’s budget up to the end of 2020, as well as outstanding debts and liabilities for items such as the pensions of staff at European institutions.

The bill will be paid over several years and the exact figure is unlikely to be known for some time.

Senior Cabinet Brexiteers Boris Johnson and Michael Gove gave their public blessing to the deal.

The Foreign Secretary, who previously said the EU could “go whistle” for any excessive financial demands, congratulated the PM for her “determination” in reaching the agreement.

Mr Gove described it as a “significant personal political achievement for the Prime Minister”, which would make more money available for the NHS.

Mr Juncker said the agreement represented “sufficient progress” for negotiations to move on to their second phase.

In dramatic pre-dawn scenes, Mrs May and Brexit Secretary David Davis flew to Brussels to confirm with Mr Juncker the text of a joint document setting out proposals on the key divorce issues of citizens’ rights, the Irish border and Britain’s exit bill.

This morning’s announcement followed talks which continued into the early hours between the Prime Minister and Democratic Unionist Party, Arlene Foster, whose party scuppered a deal at the eleventh hour on Monday.

Mr Juncker lauded the breakthrough in Brexit talks and said he will recommend that negotiations be broadened to future relations and trade.

He told reporters that “I believe that we have now made the breakthrough that we needed”.

The Commission president said: “I will always be sad about this development, but now we must start looking to the future, a future in which the UK will remain a close friend and ally.”

Mrs May said the agreement would guarantee the rights of three million EU citizens in the UK “enshrined in UK law and enforced by British courts”.

She said that it included a financial settlement which was “fair to the British taxpayer” and a guarantee that there will be “no hard border” between Northern Ireland and the Republic, preserving the “constitutional and economic integrity of the United Kingdom”.

The Prime Minister said the agreement between the UK and the Commission, being published in a joint report, would offer “welcome certainty” to businesses.

EU leaders meet in Brussels next Thursday and are likely to endorse the assessment that enough progress has been made on the terms of Britain’s financial settlement, the status of Irish borders and the rights of citizens hit by Brexit.

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Under the terms of the negotiations being carried out under Article 50 of the EU treaties, the European Council must agree that sufficient progress has been made on the divorce issues of citizens’ rights, the Irish border and the UK’s financial settlement before talks can move on to the issues of trade and transition.

The publication of the joint report makes it all but certain that 27 EU leaders will approve this step on Thursday, marking a significant step forward in the process leading towards UK withdrawal in March 2019.

It eases pressure on Mrs May, who was facing the prospect of businesses activating contingency plans to move staff and activities out of the UK if no progress had been made by the end of the year.

Mr Juncker cautioned: “The joint report is not the withdrawal agreement. That agreement needs to be drafted by the negotiators on the basis we have agreed yesterday and today and then approved by the Council and ratified by the UK Parliament and European Parliament.”

Mr Juncker said that he and Mrs May had discussed the need for a transition period following the formal date of Brexit, and shared “a joint vision of a deep and close partnership”.

“It is crucial for us all that we continue working closely together on issues such as trade, research, security and others,” he said.

“We will take things one step at a time, starting with next week’s European Council, but today I am hopeful that we are all moving towards the second phase of these challenging negotiations and we can do this jointly on the basis of renewed trust, determination and with the perspective of a renewed friendship.”

Mrs May said that the negotiation process “hasn’t been easy for either side”.

“When we met on Monday, we said a deal was within reach,” the PM said. “What we have arrived at today represents a significant improvement.”

Mrs Foster had said that “substantial changes” to the text rejected on Monday would mean there was “no red line down the Irish Sea” in the form of a customs barrier between Northern Ireland and the rest of the UK.

Ireland’s deputy prime minister Simon Coveney said this morning the government was content at assurances it had achieved about avoiding a hard border.

He said there was now “no scenario” that would result in new border checkpoints.

“Ireland supports Brexit negotiations moving to phase two now that we have secured assurances for all on the island of Ireland,” he said.

He said the deal “fully protected” the Good Friday Agreement, the peace process and an all-Ireland economy.

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Here is what Mrs May said in full about the early morning meeting in Brussels:

"We've been working extremely hard this week and as you've all seen it hasn't been easy for either side.

"When we met on Monday we said a deal was within reach.

"What we have arrived at today represents a significant improvement and I'm grateful to the negotiating teams, led by David Davis and Michel Barnier, for their efforts.

"Getting to this point has required give and take on both sides.

"And I believe that the joint report being published is in the best interests of the whole of the UK.

"I very much welcome the prospect of moving ahead to the next phase, to talk about trade and security and to discuss the positive and ambitious future relationship that is in all of our interests.

"I have consistently said that we will build a deep and special partnership with the EU as we implement the decision of the British people to leave at the end of March 2019.

"Doing so will provide clarity and certainty for businesses in the UK and the EU and crucially for all our citizens.

"The deal we've struck will guarantee the rights of more than three million EU citizens living in the UK and of a million UK citizens living in the EU.

"EU citizens living in the UK will have their rights enshrined in UK law and enforced by British courts.

"They will be able to go on living their lives as before."