Theresa May is set to make a big Brexit speech in Florence later this month
The PM may be about to accept an offer from French president Emmanuel Macron, which would see Britain continue to pay for Single Market access over three years rather than stumping up one big Brexit bill.
This would see continued annual contributions to Brussels of around £10 billion for a period of three years – slightly higher than our current net payment of £8.6 billion.
But, crucially, it would allow the UK to avoid a hefty lump sum divorce settlement – dubbed a “global amount” by eurocrats – which could reach as high as an eye-watering £90 billion.
The plan has been floated by Mr Macron in an attempt to break the Brexit talks deadlock, with negotiations having stalled over Brussels’ demands for the huge cash payment.
But the French president’s proposals are not believed to match the expectations of either German chancellor Angela Merkel or many within the EU Commission, who want a higher payout.
So far the EU has demonstrated remarkable unity over the issue of Brexit, with the member states refusing to budge on the mandate they have handed down to chief negotiator Michel Barnier.
But one former British diplomat, who is familiar with the negotiations, told the BBC the prime minister could throw the EU “into disarray” for the first time if she accepts France’s plan.
They predicted that if she puts forward such a “sensible offer”, which would ensure the smooth continuation of the bloc’s budget plans, some member states may begin to rebel from the Commission’s hardline stance.
When asked about the possibility of Britain paying a transitional fee instead of a Brexit bill last month, a very senior eurocrat insisted the two demands must be kept separate.
She said: “This is an independent discussion because obviously, should there be transition, there is a contribution to make to that Single Market participation which is independent and on top of any debt from the past.”
Sticking to the bloc’s mantra that the talks must be conducted in phases, she added: “In the first phase of our negotiation we – the EU – only talk about the past. We’re not talking about transition or any future relationship.”
Tthere is a contribution to make to that Single Market participation which is independent and on top of any debt from the past.”
However, British officials believe this stance could be tested if they were to put forward a generous offer on payments for Single Market access that seems reasonable to many member states.
They are banking on the fact that a number of EU countries, especially those like Ireland, the Netherlands and Denmark which have close trade ties with Britain, will seize upon a compromise in order to break the deadlock.
Under the EU’s phased negotiating strategy, which has been described as “inflexible” by the UK, talks on trade can only begin once “sufficient progress” has been made on citizens’ rights, the Brexit bill and Ireland.
Progress, albeit slow at times, is being made on the first and last of those subjects but the financial settlement is at a dead end, with the UK refusing to accept its legality and Brussels adamant it will not compromise.
Against that backdrop, Mrs May is set to deliver a make or break speech in Florence on September 22. Its contents are being kept closely under wraps, but it is widely predicted she will make a long-awaited Europe on money.
She would need to get any offer on transitional payments signed off by her Cabinet – a tricky task given some Brexiteers, most notably Boris Johnson, have been outspoken on the issue.
But they may now feel that, given the dire progress of the talks, framing the transaction as a fee for Single Market access rather than a divorce bill would be a palatable compromise and easier to stomach for voters.
Earlier this month EU chief negotiator Michel Barnier described the upcoming speech as “very important” and indicated that he was waiting to hear what she had to say that could spark new progress.
Meanwhile the European parliament’s Brexit rapporteur, former Belgian PM Guy Verhofstadt, billed Mrs May’s speech as an “important intervention” and suggested the bloc may need time to react to its content.
And one Tory MEP told express.co.uk the PM could be preparing to make the bloc an offer on money, on the condition that they agree to accelerate towards opening talks on a transitional deal.
They added that the EU Council would need to be given at least two weeks to run the rule over any agreement reached between David Davis and the Frenchman’s team. The next meeting of the Council at 27 is on October 20.