Brexit talks will begin with both sides far from an agreement on their key objectives after the EU insisted it will only discuss a trade deal with UK once “sufficient progress” has been made on its divorce settlement. The hardline stance from the European Council (EC) in its draft negotiation guidelines gives the UK government only a slim hope of securing a vital free trade agreement before Brexit takes hold.
EC president Donald Tusk said parallel talks on exit and trade terms “will not happen” until a divorce bill of up to £50 billion is settled.
He suggested this could happen by autumn, leaving less than a year to discuss trade before ratification of the Brexit deal by national parliaments is set to begin. Mr Tusk insisted the EU would present a united front, ruling out talks between the UK and any of the 27 other member states.
There was anger at the suggestion that Spain could be given a veto on the future status of Gibraltar.
Mr Tusk said Brussels will take a “constructive” approach and wants to keep the UK as a “close partner” on trade and security in the future, statements which were welcomed by Downing Street and ministers.
But the EU said it would not allow the UK to pay for access to the European single market for key economic sectors like financial services and car makers, raising the stakes for securing a free trade deal.
It means that a transitional deal to extend the UK’s access to the single market beyond the point of Brexit will be essential to avoid businesses falling off a “cliff edge” change in their trading status.
There was good news for the government as it seeks to keep the border between Northern Ireland and the Republic open after Brexit, with the EU saying it was willing to respect the Common Travel Area and consider “flexible and creative” solutions.
However, Mr Tusk also insisted that the UK would remain under the authority of the European Court of Justice and retain the free movement of people during any transitional period, a demand that will make life awkward for Theresa May with Brexiteers on her back benches.
The UK was also told it would have to keep much of the EU legislation it is currently subject to if it wants a free trade deal, with a warning against “fiscal, social and environmental dumping”.
Labour MP Chuka Umunna, who chairs the group Vote Leave Watch, said the EU’s guidelines had “blown the government’s Brexit strategy out of the water”.
Liberal Democrat leader Tim Farron said the guidelines showed “the strength of the EU in these negotiations and the carelessness of the UK government in isolating themselves from our European allies”.
But Ukip leader Paul Nuttall said the “rigid approach” was “bound to create more division amongst EU nations” and would be abandoned.
Speaking in Malta, Mr Tusk predicted withdrawal negotiations would be “difficult, complex and sometimes even confrontational”. He said: “Starting parallel talks on all issues at the same time as suggested by some in the UK will not happen.
“Only once we have achieved sufficient progress on the withdrawal can we discuss the framework for our future relationship.”
Mr Tusk added: “The EU27 does not and will not pursue a punitive approach. Brexit in itself is already punitive enough.
“After more than 40 years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible.”
He said it was a matter of “fairness” that the UK should make good on financial commitments it had already entered into, which the EU estimates at up to £50bn.
“It is only fair towards all those people, communities, scientists, farmers and so on to whom we, all the 28, promised and owe this money,” Mr Tusk said.
Maltese prime minister Joseph Muscat, whose country currently holds the EU presidency, said Brussels would draw up a “clear balance sheet” of what Britain owes. “It will be a tough negotiation, but it will not be a war,” he said.
Mr Tusk will visit London for talks with the Prime Minister ahead of an April 29 summit in Brussels, when the guidelines will be debated and approved by the remaining 27 member states.
A UK government spokesman said: “These are draft guidelines and we look forward to beginning negotiations once they have been formally agreed by the 27 member states. It is clear both sides wish to approach these talks constructively and, as the Prime Minister said this week, wish to ensure a deep and special partnership between the UK and the EU.”
Rowing back from language in the Prime Minister’s letter on Wednesday and echoed by the Home Secretary Amber Rudd, the Foreign Secretary said the UK’s commitment to European security and defence was “unconditional”.
Mrs May faced accusations of “blackmail” for appearing to make an agreement on continued security cooperation with the EU conditional on securing a trade deal.
Boris Johnson said: “I want to stress one thing, the UK’s commitment to the defence and security of this region, of Europe, is unconditional and it is not some bargaining chip.”