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How much! - Brexit Bill

British and EU negotiators have reached a deal over the so-called Brexit bill, opening the door to a potential breakthrough in the talks this December, the Telegraph has learned.

Sources on both sides confirmed that an agreement-in-principle has now been reached over the EU’s demand for a €60bn financial settlement ahead of a crucial lunch meeting next Monday between Theresa May and Jean-Claude Juncker, the European Commission president.

Two sources confirmed that the terms were agreed at a meeting in Brussels late last week after intense back-channel discussions led by Oliver Robbins, the UK’s chief Brexit negotiator.

The Telegraph understands that the final figure, which is deliberately being left open to interpretation, will be between €45bn and €55bn, depending on how each side calculates the output from an agreed methodology.

It means the final amount will be far higher than the opening €20bn offer to win "sufficient progress" made by Mrs May in her Florence speech. The gross UK settlement, before deductions, is understood to be €100bn.

After being dragged down earlier in the day by Bank of England governor Mark Carney’s gloomy warning of potential Brexit “pain”, sterling spiked above €1.12 against the euro as traders piled into the currency on news of a breakthrough in negotiations.

Although it remains true that "nothing is agreed until everything is agreed", sources said that the breakthrough on money effectively now leaves only two major obstacles to overcome in order to make progress when the European Council meets on December 14-15.

These are defining the role of the European Court of Justice in governing the agreement on the rights of 3.2million EU expats in the UK after Brexit, and the continued row between London and Dublin over avoiding a return of a hard border in Northern Ireland.

“The deal on the money is there; it’s now the ECJ question and Northern Ireland that are the outstanding issues ahead of the Council,” said a senior source involved in the negotiations.

The British offer on all three areas - money, citizens’ rights and Northern Ireland - is now expected to be delivered by Mrs May on December 4 in order to enable Michel Barnier, the EU’s chief negotiator, to make his recommendation on “sufficient progress”.

If Mr Barnier gives the green light, a meeting of EU ambassadors scheduled for December 6 will be used to draft guidelines for the December 14-15 European Council summit, with the European Parliament likely to vote on its own “sufficient progress” resolution on December 13.

The precise size of the UK’s payment will not be calculated until the point of UK exit, and the Telegraph understands the EU side is discussing how to obscure the final bill in order to help Mrs May overcome political opposition from Brexiteers.

The UK had already signalled a willingness to pay €40bn, but the Telegraph understands that Mrs May was forced to increase that offer during the course of the last week and has acceded to majority of the EU's demands.

Brexit divorce billA third EU source with knowledge of the talks said the text of the deal would allow a “low figure” to be generated for the UK public, but that the final text of the deal would give the EU certainty it was looking for, which is in excess of €50bn.

A spokesman for the Department for Exiting the European Union said that “intensive talks” were continuing in Brussels ahead of next week’s meeting.

“We are exploring how we can continue to build on recent momentum in the talks so that together we can move the negotiations on to the next phase and discuss our future partnership,” he said.

Prior to the deal, senior EU negotiators told the Telegraph the UK would need to formally commit to honouring its share of EU pensions, outstanding loan liabilities and €250bn in outstanding spending commitments from the current 7-year budget cycle, due to be disbursed after 2020.

Although the EU has not demanded a final number, the Telegraph understands that it has pinned down the UK over its share of those commitments, leaving only limited room for manoeuvre.

The UK side will seek to massage down its total bill by off-setting the UK's share of European Investment Bank (EIB) capital and discounting payments that are not immediately due, such as Eurocrats’ pensions and potential EU loan defaults to Ukraine, Ireland and others.

EU sources have also argued that Mrs May’s original commitment in Florence to pay €20bn to cover UK contributions during a transition period in 2019 and 2020 would need to be increased. “Net contributions in these two years taken together are clearly above €20 billion,” the source added.

Despite the progress on the bill, the twin problems of the ECJ’s role and the Northern Irish border remain significant obstacles to progress.

A fourth EU source said the deal on EU citizens’ rights was “85 per cent there”, but questions remained over whether the children of EU expats would retain family rights for life; the export of winter fuel allowance and streamlining the UK cost and bureaucracy for EU nationals applying for “settled status”.

On the ECJ question, the discussion is over the extent to which the UK’s Supreme Court should - or must - “pay due regard to” the rulings of Europe’s top court in so far as they impact the rights of EU citizens living in Britain.

Negotiators are still searching for a satisfactory formula that will preserve the ECJ as the final arbiter of EU law, while maintaining the sovereignty of UK courts which David Davis, the Brexit Secretary, has repeatedly promised will be preserved.

By far the most difficult issue, however, remains the Northern Ireland border question with negotiators currently in near-continuous talks to try to draft written commitments on the future of the border that will satisfy the Irish government.

Dublin has demanded “written guarantees” that Northern Ireland will not diverge from EU rules and regulations - a demand that is difficult to reconcile with Mrs May's determination to adopt an independent trade policy.

Negotiators now have less than a week to find a form of words that reassures Dublin of London’s commitment to the Good Friday Agreement, while preserving room to create “granular”, tailor-made solution protects both sides interests.

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