Exclusive: Britain quietly paid £1bn Brexit Day bill to Brussels

The European Commission said the date of the demand, which saw the UK pay an increased £10bn EU budget contribution, was 'coincidence'

Speculation is building a trade deal between David Frost (left) and Michel Barnier is imminent.
Speculation is building that a trade deal between chief negotiators David Frost (left) and Michel Barnier is imminent Credit: EPA

Britain quietly paid the billion pound bill it was handed by Brussels on Brexit Day during EU trade negotiations, the Telegraph can reveal, as hopes that a deal can finally be done rise. 

The European Commission sent the Government a demand for an extra £1.09 billion on top of its Budget payments to Brussels on January 31, the very day the UK legally left the EU

Senior officials told EU ambassadors that a deal was “close” and “95 per cent” done on Friday, despite trade negotiations being thrown into disarray after a member of Michel Barnier’s team tested positive for coronavirus.

But both sides warn that crucial breakthroughs and painful compromises are still needed on the key issues of fishing, the level playing field guarantees and the deal's enforcement. 

“Why has the government surrendered an important bargaining chip?,” Nigel Farage, the Brexit Party leader, said. “Weakness never works with the EU.”

Tory backbenchers had called for the payment of the Brexit Day bill to be made conditional on the successful conclusion of trade negotiations. 

But invoice was quietly paid in full in the summer, removing a potential obstacle to a deal, after UK-EU trade talks began in March.  

“We have weakened our negotiating position. We should have said the cheque was in the post,” said Andrew Bridgen, the Tory MP for North West Leicestershire.

“Throughout Brexit, the EU has taken every advantage of playing the cad and we accept every disadvantage of playing the gentleman.”

“The amount of €1.3 billion has been made available on time by the UK, as per the rules on the first working day of June 2020,” an EU official said. 

 

As Brexiteers celebrated the UK leaving the EU on January 31, the UK's embassy to the EU received a bill for a billion pounds from Brussels, which was subsequently paid Credit: Leon Neal /Getty Images Europe 

The European Commission said the Brexit Day date of the demand, which means the UK paid £10 billion rather than the expected £9 billion in its penultimate Budget contribution, was “coincidence”.

Brussels recalculates the contributions member states make to the EU Budget every year. EU officials said Britain owed an extra £1.09 billion pounds on top of the 2019-2020 Budget payment of £9 billion due to an increase in the UK’s gross national income and VAT contributions. 

Britain committed to paying its EU Budget contributions until the end of 2020, the final year of the seven-year budget cycle, at the start of the Brexit process in 2017.

The UK had agreed to pay a financial settlement of about £39 billion as part of the Withdrawal Agreement, whether or not there is a trade deal. 

That figure was reduced by the UK’s Budget payments during the time the Article 50 process was extended. 

A Government spokesperson said Britain will receive back about half of the billion pounds, once the British rebate, which was famously secured by Margaret Thatcher, is applied to its payments. 

The spokesperson said: “We paid our share in June in line with our Withdrawal Agreement obligations and are expecting half the money back through the rebate this month.

“The fact that the EU invoiced us for a vast sum is just one of the reasons why the public voted to leave the EU and take back control of the UK’s money.”

Trade negotiations will continue online while Mr Barnier is in self-isolation and are expected to resume face to face at the end of the week.