Theresa May Stands Defiant on Brexit Talks, Exposing Rift With EU -- Update

By Jason Douglas in London, and Laurence Norman and and Valentina Pop in Brussels Features Dow Jones Newswires

U.K. Prime Minister Theresa May said Sunday that Britain won't agree to pay an exit bill for leaving the European Union without also agreeing a new trade deal with the bloc, highlighting a hard-to-resolve division between the opposing camps ahead of talks on Brexit.

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In an interview with the British Broadcasting Corp., Mrs. May reiterated a longstanding British position that reaching agreement over the terms of Britain's exit and its future relationship with the EU must be done together.

"I'm very clear that at end of the negotiations we need to be clear not just about the Brexit arrangements--the exit, how we withdraw--but also what our future relationship is going to be," Mrs. May said on the BBC's Andrew Marr Show.

Asked if that meant the U.K. wouldn't agree to settle any divorce bill until all negotiations are finished, including those covering trade, Mrs. May said: "The EU itself has said that nothing is agreed until everything is agreed."

The EU, which on Saturday set out its core positions on Brexit after a summit of leaders, wants a phased approach to negotiations in which Britain agrees to settle its outstanding liabilities to the EU and other divorce issues before talks turn to trade. The EU calculates the U.K. could owe it EUR55 billion to EUR60 billion ($60 billion to $65 billion) to settle commitments made to the EU budget but not yet paid.

Several leaders expressed frustration with the U.K. government, saying it hadn't fully understood the importance of settling the divorce issues before moving on to talks on the U.K.'s future relationship with the bloc.

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"I have the impression that these phases--phase one separation, phase two future relationship--are not clearly understood by some in the U.K.," said German Chancellor Angela Merkel. She said talks will move on to the next phase only if all 27 EU leaders agree there is sufficient progress in divorce talks.

EU officials said Saturday the British government still seems to believe that, on the issue of the rights of EU citizens living in the U.K., it would be enough to secure a broad agreement promising fair treatment when, in fact, the EU wants a detailed deal in place.

"I have the impression sometimes that our British friends...do underestimate the technical difficulties we have to face," European Commission President Jean-Claude Juncker said. "The single and not simple question of citizens rights is in fact a cortege of 25 different questions which have to be solved. So this will take time."

Mrs. May acknowledged Sunday that Brexit talks will be tough, but said she is confident the two sides can reach a deal.

One senior EU official said Sunday that her interview should be read against the backdrop of coming general elections on June 8. "After the election, we'll see how much was campaign rhetoric and how much genuine thinking in London. If it's serious, then they're really in trouble," the official said. Opinion polls point to victory for Mrs. May and her governing Conservative Party, a win she says would strengthen her hand in Brexit talks with the EU's remaining 27 members.

Saturday's meeting was the first formal summit of EU leaders without Mrs. May, a month after she sent Britain's divorce letter.

In an early sign of upcoming financial squabbles, Britain earlier this week took its EU counterparts by surprise with a last-minuted decision to block some EUR6 billion in EU spending on security, aid and other programs.

The U.K. government told Brussels it couldn't approve the spending because the government had now gone into the official pre-election period. EU officials said that Britain hadn't in the past blocked decisions following through on already agreed programs.

"It would be desirable and it would facilitate the beginning of the negotiations if the U.K. were to be able to withdraw the reservation that it entered," said Mr. Juncker.

Write to Jason Douglas at jason.douglas@wsj.com, Laurence Norman at laurence.norman@wsj.com and Valentina Pop at valentina.pop@wsj.com

(END) Dow Jones Newswires

April 30, 2017 12:10 ET (16:10 GMT)