BREXIT talks with the European Union stalled yesterday as Brussels said the UK still has not done enough to move on to the next stage.

Theresa May had hoped her big speech in Florence last month, proposing a two year transition and the paying of debts, might kick-start trade talks.

But yesterday the fifth round of formal talks between the EU’s chief negotiator, Michel Barnier, and British Brexit minister David Davis shuddered to a halt.

Loading article content

In a joint press conference, at which both men seemed irritated, Barnier announced that he will tell leaders of the 27 EU countries at next week’s European Council summit that there has not been sufficient progress on the three “divorce” issues: Ireland’s border, the rights of EU citizens’ living in the UK, and the paying of liabilities.

The main stumbling block seems to be money – what the UK will owe the EU on Brexit day in March 2019 for matters such as the pensions of former EU staff in the UK, the cost of relocating EU agencies based in the UK and outstanding commitments to EU programmes.

Estimates on the size of the so-called “divorce bill” have varied from around £50 billion to £100bn.

“On this question we have received a state of deadlock, which is very disturbing for thousands of project promoters and very disturbing also for taxpayers … I’m not able to propose to next week’s European Council that we start discussions on the future relationship,” Barnier said.

Unless the EU27 ignore Barnier, which is highly unlikely, trade talks will now not start until the end of the year at the earliest.

The pound tumbled on the news, slumping 0.6 per cent against the dollar to 1.31, and 0.6 per cent on the euro to 1.10.

Davis appealed to the EU leaders to dismiss Barnier’s recommendation and force their man to talk trade.

“I hope the leaders of the 27 will provide Michel with the means to explore ways forward with us on that and build on the spirit of co-operation we now have.”

Barnier retorted: “To make a success of the negotiations we have got to do things in the right order. That is a condition of success.

“If we mix everything up, there are risks.”

He said: “There is no question of making concessions on citizens’ rights. There is no question of making concessions on the peace process in Northern Ireland.

“As regards the financial settlement, there is no question of making concessions on thousands of European investment projects throughout Europe.”

He added: “I’ve been saying since the Florence speech that there is a new momentum, and I remain convinced today that with political will, decisive progress is within our grasp in the next two months.”

Davis said the time was not right for making “specific commitments” on the size of the divorce bill.

The failure to make any progress will likely reopen splits in the Tory Cabinet over how much should be spent preparing for the possibility of a “no-deal” Brexit.

Chancellor Philip Hammond has said he would wait until the last possible moment before he starts spending money on ramping up the UK’s customs operations and building the lorry parks and other infrastructure near ports needed by Britain after crashing out of Europe.

He was slapped down by the Prime Minister, who said £250 million was already being allocated to different government departments. “Where money needs to be spent, it will be spent,” she told the Commons.

The SNP’s Europe spokesman, Stephen Gethins, said: “The worrying revelation from the EU’s chief negotiator that sufficient progress over key issues has not been made in order for talks to progress highlights the brick wall approach that the UK Government has taken in these negotiations, offering little in the way of clarity.

“The conclusion of this round of negotiations has revealed the utter irresponsibility and lack of preparedness on display from the UK Government. It is as if they have not been in the same room, let alone on the same page as the EU officials in these negotiations.

“The UK Government has had 15 months to prepare and their woeful approach could have dire consequences for each and every one of us given the importance of these talks to our economy.”

Labour’s Shadow Brexit Secretary Keir Starmer said: “Ministers have wasted months of the Brexit talks fighting amongst themselves.

“This increases the chances that Britain will crash out of the EU without a deal. That would be catastrophic for jobs and living standards and must be rejected as a viable option.”

He added: “They must drop their ideological red lines and work round the clock to find a resolution”.