MNI ANALYSIS: UK's May Between EU Rock And Brexit Hard Place

By Kieran Williams

     LONDON (MNI) - Shattering expectations that UK Prime Minister Theresa May

is going to use a speech in the city of the Renaissance Friday to breathe new

life into the Brexit debate, recent reports suggest the speech may not be quite

as illuminating as first hoped and risks falling short of progressing the talks

in Brussels.

     May has been notoriously tight lipped regarding any significant Brexit

commentary since Article 50 was enacted in March. However that has not stopped a

range of factions within the government from positing several different

approaches to Brexit.

     This has highlighted divisions within the government, not over if there

will be a Brexit, but over which version of Brexit will reign supreme.

     The Prime Minister will use the Florence speech to attempt to put a united

government view on the way forward with Brussels, having attempted to coalesce

support around a single version at a Cabinet meeting in London Thursday.

     Her comments will be to a carefully selected audience, but undoubtedly

aimed at the 27 other European leaders and Commission officials in Brussels.

     But all ears will be on whether -- and how -- she addresses the issue of

the UK's final financial settlement with Brussels, the so-called 'divorce bill'.

     Media reports earlier this week -- emanating from 'Remain' leaning

newspapers -- suggest that May's speech will outline an offer of E20 billion to

fulfil the UK's obligations to the EU after Brexit, with Whitehall officials

having already spoken to counterparts across Europe.

     This offer, if accepted, would fill the budget hole left by Brexit to 2020

where the UK has indicated that no EU member states will be left out of pocket

by Brexit.

     Marta Vokshi of independent policy think tank Open Europe says "Theresa May

is committing to carry on paying the annual UK budget contributions to the EU

for the years 2019-2020, because that's how long the current Multiannual

Financial Framework runs up to. In making this offer May is hoping it would

restart the stalled Brexit talks and move on to discussing the future

relationship with the EU."

     Both Downing Street and the Cabinet office refused to comment on the

speculation and would not remark on the content of the speech.

     It is unclear how such an offer by May would play out, both in London and

in Brussels. It is still far from clear whether all of the UK Government will be

behind the plan, with lead Brexit supporter Boris Johnson unable to fully quash

speculation that he will resign his position as Foreign Secretary if any

unwarranted financial offer is made.

     The proposal is also likely to get some push back from the EU. Initial

grumblings indicate that EU officials simply expected May to signal her intent

to pay some Brexit divorce bill and negotiate on an actual amount.

     Moreover, a senior EU official said in Brussels today that

headline-grabbing announcements won't be enough to make talks progress.

"Anything that is going to be stated in Mrs May's speech in the context of

negotiations still needs to be translated into formal papers and formal

positions from the UK," the source said. She added that it was still "too early

to tell" whether sufficient progress will be declared in October to launch

parallel talks on future relationship.

     Official talks between the EU team led by Michel Barnier and the UK's

Brexit Secretary David Davis will continue next week in the wake of May's

announcement.

     But all eyes could be on Tallinn, where May intends to bump up her vision

during a dinner of EU leaders on Sept 28.

     The dinner, originally intended to be informal, has grown in importance and

will now have an official agenda arranged by European Council President Tusk --

but that will not include Brexit, the EU source said.

     "If Prime Minister May would come with her own agenda and her own questions

to heads of state and government this is not our intention," the EU source

added.

     According to Open Europe's Vokshi, Brussels would not see the E20 billion

figure as "enough to settle the UK's accounts. Many want Britain to pay for

financial obligations, that the UK signed up to before Brexit, that could arise

in the future such as the deal with Turkey on migration and aid to Africa via

the EU."

     However, Vokshi sees this as the starting point of a more detailed

negotiation over the settlement figure.

     "Though it may not be what the EU hoped for, the figure does however reduce

any financial settlement that may be agreed later, but the UK has to signal this

is just a start and they are willing to discuss its commitments further," she

said.

     Other expectations over the speech are more mixed. Some expect the PM to

outline what sort of transition deal the UK would want and how long it would

look for the arrangements to last after the March 2019 Brexit date.

     May is certainly not wedded to any of the current trade models the EU has

in place as a basis for the UK's transition arrangements, saying only that the

UK would seek a "bespoke deal".

     "I've always said that we're not looking to take a model off the shelf of a

relationship that currently exists because the UK is unique," May told

journalists on Monday.

     [Expectations are mixed for the speech - repetitive - take out] One thing

analysts seem to be agreed on is that May will attempt to inject some life into

stalled Brexit negotiations amid urgings to hurry up by EU Chief Negotiator

Michael Barnier.

     UK negotiators are keen to embark on talks about the UK's future trade

relationships, especially after warnings of the protracted nature of the divorce

settlement from David Davis. 

     Even here, the UK government has differing positions -- ranging from a

Swiss-style 'EEA light' model with tighter curbs on free movement to something

closer to the EU-Canada free trade agreement. Peacemaker May is trying to hold

her Cabinet together by calling for a bespoke deal.

     However, many across the EU are sceptical that enough progress will have

been made on the financial settlement, Irish issues and citizens rights to

recommend at the October leaders' summit moving talks on to future trade

arrangements.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 3809; email: kieran.williams@marketnews.com

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