British Prime Minister Theresa May has agreed to honour the UK’s financial liabilities to the European Union. Payments worth €100 billion are due to the EU as a fine for leaving the trading bloc.
However, the UK hopes to slice the figure down to around $60 billion, due to the devaluation of the pound and the relative decline of the UK’s economy.
The pound added 0.5% against the dollar, while gaining 0.36% against the euro on the announcement.
The decision is seen as a breakthrough in an otherwise slow-moving negotiation process. Over the next week, the Prime Minster will present the deal, using the fine payments as leverage against the contentious question of the border between Northern Ireland and the Republic of Ireland.
Negotiators are striving for significant progress on issues such as citizen rights, Northern Ireland and the financial settlement, before December’s summit. May has until Monday to draft a proposal on how the Irish border issue should be handled.
If the EU governments accept May’s deal, talks can begin at the December 14th summit. Businesses are anxious to start trade talks and see more detail on what the transition period out of the EU will look like for Britain.
The ‘’Brexit bill’s’’ final figure will not be agreed upon for many years, due to liabilities that stretch far into the future, such as pensions. The UK aims to pay the fine in stages rather than a lump-sum, giving the nation a chance to redirect the funds.
May won the support of her cabinate with the financial offer, provided that the Prime Minister locks in a good trade deal in the divorce proceedings.
The EU’s main objective has been to reclaim the liabilities accrued while the UK was part of the single market.