The EU will demand the UK pays into Brussels budgets designed to help poorer European countries as the price of a Brexit reset deal to bring down energy bills.

With both sides scrambling to deal with soaring energy costs due to Donald Trump’s Iran war, the EU has formalised a demand that the UK contributes to Brussels’ “cohesion policy” if it wants a deal to join the continent’s single market for electricity.

It is likely to lead to a clash with the UK, with EU relations minister Nick Thomas-Symonds telling The i Paper in December that Britain would “not make general contributions to the EU budget” to get an electricity deal, and comes amid wider Brexit reset tensions.

New FeatureIn ShortQuick Stories. Same trusted journalism.

However, that resistance is likely to be tested amid a growing global energy crisis. UK participation in the EU electricity market would allow British firms to export energy to the bloc, and is hailed by both sides as a way to drive down household bills, boost profits and investment in the industry, and bolster energy security.

Pressure growing on electricity bills

In a sign of the pressure on electricity bills, Cornwall Insight last week forecast that electricity costs for businesses increased between 10 per cent and 30 per cent since the war began in late February.

Domestic electricity costs are capped until July, but there are fears household bills could increase dramatically when the next cap is set.

Reducing the cost of living is a key commitment of the Government, and becoming the main political battleground. However it is unlikely any deal with the EU will be reached this year.

EU member states agreed to make the demand for contributions to the cohesion fund their official negotiating position.

The EU Council said that an electricity deal would mean the UK participating in the European electricity market by aligning with Brussels law, “thus significantly contributing to energy security for both parties, especially amid the current geopolitical turmoil”.

However, there should be a “parallel” negotiation on a UK financial contribution “towards reducing disparities between the EU regions”, with the council arguing this was “part of a consistent EU policy that couples the granting of market access to a third country with a fair financial contribution reflecting the benefits derived from such access”.

EU also agrees access to the Erasmus+ student exchange scheme

Alongside this, the Council formally agreed to allow the UK to join the Erasmus+ exchange programme, which both sides agreed at headline level in December.

Marilena Raouna, deputy minister for European affairs in Cyprus, which holds the rotating Council presidency, said: “Strengthening the [European] Union’s relations with the United Kingdom is a key priority of the Cyprus presidency.

“Today’s decisions mark tangible progress in delivering on the outcomes of the first EU–UK Summit held in May last year, where we opened a new chapter in our partnership.

“By promoting learning mobility via Erasmus+, we are advancing shared interests and reinforcing people-to-people ties, especially for our youth.

“At the same time, by deepening co-operation in electricity, we are enhancing energy security and creating new opportunities for businesses.

“These decisions undoubtedly mark a significant step in forging a strong, mutually beneficial, and forward-looking EU-UK partnership.”

For the Conservatives, Shadow Cabinet Office Minister Mike Wood said: “This deal goes far beyond rejoining schemes like Erasmus. The UK is now being subjected to pay into funding EU infrastructure, regeneration and cross-border projects across Europe that bring no direct benefit to the British public.

“Keir Starmer appears ready to sign up to substantial payments to Brussels without securing meaningful returns – raising serious questions about value for money for hardworking British taxpayers.

“Taken together, this looks less like pragmatism and more like a backdoor way into rejoining the EU.

“Whilst Labour are looking to reignite this decade old debate, the Conservatives, under new leadership, have a plan to take Britain forward.”