UK to offer EU €20 billion for a transitional Brexit deal

Theresa May is on Friday expected to propose a transitional deal with the European Union for up to two years after Brexit, during which time Britain would continue to pay into the EU budget.

The British prime minister hopes her keenly anticipated speech in Italy will help to break the deadlock in Brexit negotiations, which resume next Monday.

“While the UK’s departure from the EU is inevitably a difficult process, it is in all of our interests for our negotiations to succeed . . . so I believe we share a profound sense of responsibility to make this change work smoothly and sensibly, not just for people today but for the next generation who will inherit the world we leave them,” she is due to say.

Taoiseach Leo Varadkar is scheduled to speak to Ms May on Friday morning in a telephone call postponed from Thursday evening. Irish officials had sought to have discussions between the two leaders in advance of Ms May’s speech in Florence.

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The Taoiseach is due to travel to Downing Street on Monday for further discussions with the British prime minister.

Free trade

Speaking at the Ploughing Championships on Thursday, after a meeting in Dublin with the European Parliament’s Brexit co-ordinator Guy Verhofstadt, Mr Varadkar said he would strongly emphasise the fundamental importance of free trade between Ireland and UK.

“I am hoping we will see some progress signalled in her speech tomorrow, some indication we are moving towards an orderly Brexit and particularly a soft Brexit, one that minimises the damage to the Irish economy,” he told reporters in Screggan, Co Offaly.

The prime minister briefed ministers on the speech during a 2½-hour cabinet meeting on Thursday, after which chancellor Philip Hammond and foreign secretary Boris Johnson left Downing Street together in a display of unity.

Mr Johnson challenged Ms May’s authority with a 4,200-word essay on Brexit last week, which implicitly criticised the government’s strategy.

Mr Johnson, Mr Hammond, Brexit secretary David Davis and home secretary Amber Rudd will be in the audience in the 15th-century Church of Santa Maria Novella for the prime minister's speech. She is expected to propose a transition period of up to two years, during which Britain would continue to have access to the single market and the customs union. In return, Britain would pay up to €20 billion into the EU budget.

Final agreement

Ms May is expected to tell EU leaders that achieving a successful final agreement is in the interest of both sides.

“If we can do that, then when this chapter of our European history is written, it will be remembered not for the differences we faced, but for the vision we showed; not for the challenges we endured but for the creativity we used to overcome them; not for a relationship that ended but a new partnership that began,” she is expected to say.

The EU's chief negotiator Michel Barnier said on Thursday that that Ms May would have to make a substantive offer on citizens' rights and on the financial settlement to break the deadlock, and warned that Britain had just over a year to make a deal.

"The question facing us over the coming months is serious, but simple: will the United Kingdom leave in an orderly fashion with an agreement, or not? From our side, I repeat once again that an agreement is the best outcome. It is in our common interest. But if we want a deal, time is of the essence," he said.

Mr Verhofstadt told the Dáil that the EU would never allow Ireland to suffer because of the UK’s decision to leave.