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Brussels plots to squeeze an extra £10billion out of Britain by scrapping rebate during Brexit transition

The EU’s chief Brexit negotiator wants to squeeze an extra £10billion out of Britain by getting rid of the UK’s budget rebate in the two year transition deal. The Government is understood to have doubled its offer to Brussels from £20billion to £40billion in bid to kick start trade talks.

But now it has emerged Michel Barnier wants to abolish the rebate – which sees some of the cash the UK pays into Brussels returned – during a two-year transition deal.
This would push up the final Brexit divorce bill to an eye-watering £50billion – far higher than many Britons would expect. Any move to strip Britain of its rebate would enrage Brexiteers and could derail the negotiations altogether.

The rebate was secured by Margaret Thatcher in 1984 and means some of the cash the UK pours into the coffers in Brussels is paid back each year. But Michel Barnier has failed to take into account this money when spelling out how much he thinks the UK owes the bloc.

He has pegged the UK’s financial obligations at 14 per cent of the EU’s budget – rather than the lower 12.5 per cent it is after the rebate.  Mrs Thatcher won the rebate after a long battle with the EU and only after she threatened to withhold payments from Brussels.

She first called for the UK’s contributions to the bloc to be cut in 1980 telling the continent: ‘I want my money back!’ She emerged victorious four years later and Britain’s annual rebate had been fiercely guarded by every British PM ever since.

Any move by Mr Barnier to scrap the refund, which amounted to £5bn last year, risks undermining Brexit negotiations at a crucial stage.
Theresa May is due to meet with European Commission President Jean-Claude Juncker in a fortnight for a dinner she hopes will unblock the talks and kick start trade negotiations by the end of the year.

The Cabinet has already agreed to up its offer on the Brexit divorce bill to over the £20bn which had been promised, although no firm figures has been put yet. A senior EU official told Politico: ‘No magic formula or existing common position on these questions’, adding that it is a ‘matter for the negotiations.’

But Mr Barnier has repeatedly used the higher figure in interviews and speeches, suggesting that the EU’s budget will be cut by 14 per cent if no deal is reached.
In an interview this month with Le Journal du Dimanche he said: ‘What was decided at 28 [EU countries] should be settled at 28 for this period.

‘Otherwise programs will be cut by about 14 percent, the equivalent of the British contribution.’
Eulalia Rubio, a senior research fellow at the Jacques Delours Institute, told the website ‘You have to distinguish between applying the rebate to calculate the Brexit bill, which is on settling past debts, and therefore based on current legislation, and applying it to any hypothetical contribution to the EU budget linked to a future transition agreement.’

Brexit Secretary David Davis had hoped that Brussels would have moved on to trade talks by now.
But the EU has insisted that not enough progress has been made on settling the first three issues of EU citizens rights, the Irish border and the Brexit divorce bill.

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