FT — Britain has bowed to EU demands and agreed to fully honour its financial commitments as identified by Brussels, removing one of the biggest obstacles to a Brexit divorce settlement.
According to several diplomats familiar with the talks, the UK would assume EU liabilities worth up to €100bn although net payments, discharged over many decades, could fall to less than half that amount.
Prime minister Theresa May is expected to formally present the breakthrough offer next week as part of package deal if agreement can be reached on the other issues of citizen rights and the contentious question of the border between Northern Ireland and the Republic.
The pound was 0.5 per cent higher at $1.3404 on Wednesday morning, taking its rally against the dollar since the news broke overnight to just over 1 per cent.
Against the euro, sterling was 0.2 per cent stronger, with £0.8856 required for a unit of the shared currency.
Both sides say no final figure will be agreed on Britain’s exit settlement next week.
The political compromise engineered between London and Brussels aims to guarantee to the other 27 EU member states that there will be no Brexit gap in the discharge of the current EU budget, while allowing the UK to point to much lower estimates of net payments and contingent liabilities.
Mrs May won the backing of her cabinet to break the deadlock in Brexit talks with an increased financial offer, but on the condition it was tied to a good trade agreement. British ministers have made clear that “nothing is agreed until everything is agreed”.
According to commission estimates circulated to member states, these include €582bn of unpaid spending commitments in the 2014-2020 long-term budget, around €83bn of obligations such as pensions, and around €88bn of contingent liabilities, such as outstanding loans.
France, Germany and other member states appear satisfied by the broad outlines of the deal. Net estimates that the UK share would take account of receipts worth around €28bn, including agricultural payments to UK farmers and structural funds for investment projects in Britain. Actual payments for structural funds could be made years from now. British officials are working on other potential methods to bring down the net estimate, which the EU originally put at around €60bn.