Brussels has told Sir Keir Starmer that Britain will have to make annual payments into European budgets for the first time since Brexit, as part of the prime minister’s reset with the bloc.
European negotiators have made it clear that paying the cash, expected to amount to about £1 billion a year, is a condition of further access to the EU’s single market.
They want Starmer to make the concession in principle at a summit between the prime minister and European leaders this summer before detailed negotiations on more integration.
Carl Court/Getty Images
“If the UK wants further integration they must ‘pay to play’,” one European diplomat said. “That is not unusual.”
Starmer will hold talks with EU leaders on Monday at the European Political Community summit in Armenia, where he is expected to discuss plans for the reset.
He will also announce that the UK will begin negotiations with Brussels to participate in the EU’s £78 billion loan scheme for Ukraine.
British defence firms would be able to provide equipment for Kyiv under the scheme in return for a financial contribution of up to £400 million from Britain.
But the EU expects Starmer to go further in contributing to the bloc’s budgets after his call this year for “deeper economic integration” and his plans to align the UK with the single market in areas “where that would work for both sides”.
European leaders agreed in March that the UK would have to pay into European Structural and Investment Funds (ESIF) for the first time since Brexit if it wanted to participate in the EU’s single market for electricity.
Politics newsletter
Get our daily insider’s guide to Westminster, plus a rundown of PMQs every Wednesday.
Sign up with one click
The European Council has also called for a “permanent mechanism” for an “appropriate financial contribution” from the UK for any further access to the single market.
It said this financial contribution should “appropriately reflect the relative size of the UK’s economy and the proportion of the internal market in which the UK aims to participate”.
Ministers are carrying out an audit of which sectors could most benefit from further integration. Chemicals, pharmaceuticals and cars are seen as a priority.
In particular, businesses want mutual recognition of product standards so exporters do not have to pay for the costly retesting of products already approved in one market.
One senior European diplomat said that Brussels would not allow the UK to “cherry pick” and would insist on a Swiss-style deal that would tie it into contributing to annual EU budgets to reduce economic, social and territorial disparities across the bloc.
As part of a deal struck with Switzerland last year, Bern agreed to pay €375 million a year to the EU’s social cohesion fund in return for privileged access to the EU single market.
The payments were calculated on the basis of Swiss GDP. Given the UK economy is about four times larger than Switzerland’s, sources in Brussels suggested that the UK could be asked to pay in the region of £1 billion depending on the deal that was struck.
Such a move would be politically contentious with both the Tories and Reform pledging to rip up Starmer’s plans for further economic integration.
Dame Priti Patel, the shadow foreign secretary, said the payments would be “taxpayers’ money handed to European institutions, with no end date and no democratic mandate”.
Dame Priti Patel spoke out against the payments to the EU, saying there was no democratic mandate for making themJames Glossop for The Times
She added: “At every turn, this prime minister goes to the negotiating table and comes home empty-handed, having paid handsomely for the privilege.”
A Labour source said: “The only deals the Tories seem interested in are ones with Nigel Farage.”
In an article for The Observer on Sunday, Starmer reiterated his desire to negotiate closer links with the EU at this summer’s summit, saying the world had changed since the Brexit vote.
“It [Brexit] has damaged our economy and there’s no doubt in my mind where the national interest lies,” he said.
“Britain must be at the heart of a stronger Europe on defence, on security, on energy, and on our economy.”
A poll for the website LabourList found that almost two thirds of Labour members would like the party to be committed to rejoining the European Union at the next general election.
The poll, conducted by Survation, found that 65 per cent of party members would like Labour to promise to rejoin the 27-nation bloc, while just under a quarter (24 per cent) said it should not make such a commitment.
Charles Grant, director of the Centre for European Reform think tank, said that while the EU was keen on greater security and defence co-operation with the UK there were some countries, including France, that were “much less keen on extending economic cooperation”.
He said: “They don’t really care if the UK has a thriving or a weak economy and are much more concerned about the old ideology of not allowing the UK to ‘cherry pick’ which parts of the single market it wants to be part of.
“The UK side may be looking at things like chemicals, pharmaceuticals and cars but Brussels is making it very clear that the UK will need to ‘pay to play’.
“They are not showing much flexibility at all.”
A government spokesperson said: “We won’t comment on ongoing negotiations.”