Arguments over the Brexit divorce bill will go on for the rest of the EU negotiations, David Davis warned today - potentially scuppering a trade deal.
Speaking in the Commons after the latest round of talks with his EU counterpart, the Brexit Secretary said the two sides had “very different legal stances” when it comes to how much the UK should pay as a financial settlement.
The EU is only prepared to discuss a new trade deal with the UK when it feels enough progress has been made on the divorce bill.
Davis is holding firm on not giving into EU demands over the money, and repeated his line from last week’s press conference that officials went through the EU’s financial demands “line by line” in order to get the best deal from taxpayers.
Unless the stalemate is resolved, the entire timeframe for the Brexit talks may have to be ripped up - making the possibility of the UK leaving the EU in March 2019 without a deal more likely.
Davis told MPs: “The money argument will go on for the full duration of the negotiation.”
He also told MPs: “There are significant differences to be bridged in this sector.”
The EU has warned the UK it will not enter into trade talks until progress has been made in a number of areas – including the financial settlement.
Fears are growing that the two sides will not make sufficient progress before the October round of talks, when it had been planned to sign off the first phase of the negotiations and move on to phase two.
Davis today said he was happy to increase the talks from once a month to a “continuous” footing, but claimed the EU were too rigid to shift their position.
The Brexit Secretary provoked laughter from Labour MPs during his update on the talks when he claimed: “Nobody ever pretended this would be simple or easy.”
Labour’s Shadow Brexit Secretary Keir Starmer was quick to remind Davis that his Cabinet colleague Liam Fox had made such a boast just six weeks ago, when he said: “The free trade agreement we will have to come to with the European Union should be one of the easiest in human history.”
Davis himself has in the past talked up the simplicity of getting a trade deal with the EU, and in the immediate aftermath of the referendum in June 2016 claimed: “We can do deals with our trading partners, and we can do them quickly.”
Speaking from the despatch box, Starmer said the latest round of negotiations seemed to showed the EU and the UK “appear to be getting further apart, rather than closer together.”
He went on: “We are reaching the stage of the negotiations where fantasy meets brutal reality.
“The truth is too many promises have been made about Brexit which can’t be kept.”
The next round of Brexit talks is set to take place on the week of September 18, with the phase one round of negotiations due to be concluded on October 9.
EU leaders are then due to meet in Brussels on October 19 to decide whether enough progress has been made on the financial settlement, citizens rights and Northern Ireland to sanction the start of trade negotiations.