Sir Keir Starmer has been warned the UK will have to make annual payments into European budgets for the first time since Brexit to secure his much-heralded “reset“ with the EU.
European Union negotiators insist the money, expected to total around £1bn a year, is a prerequisite of greater access to its single market. However, UK ministers are understood to disagree and see the demand for cash as a starting position for talks.
But the shadow foreign secretary Priti Patel has accused the prime minister of “unpicking Brexit and planning another undemocratic hit job on British taxpayers by signing us up to a £1bn annual payment to the EU”.
The row erupted as Sir Keir attended the European Political Community summit in Armenia, where he is set to hold talks with EU leaders on his plans for a new relationship 10 years on from the Brexit vote.
He has also used the event to launch a bid to join the group’s €90bn (£78bn) loan for Ukraine scheme, which he said would be “very good” for UK-EU ties and for creating jobs in Britain.
The PM is also due to attend a summit with European leaders this summer before detailed negotiations on his call for a reset begin.
“If the UK wants further integration they must ‘pay to play’,” one European diplomat told The Times newspaper, which first reported the story. “That is not unusual.”
The PM has called for “deeper economic integration” with the block and to align the UK with the single market in areas “where that would work for both sides”.
In March, European leaders agreed the UK would have to pay into European funds for the first time since Brexit if it wanted to participate in the EU’s single market for electricity.
The European Council has also called for a “permanent mechanism” for an “appropriate financial contribution” for any further access to the single market. It said this 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”.
Switzerland, whose economy is around a quarter of the size of the UK, has agreed to pay €375m a year to the EU’s social cohesion fund in return for privileged access to the EU single market.
In an article for The Observer on Sunday, Sir Keir again set out his call for closer links with the EU. “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.”
Sir Keir has poured cold water on the idea the UK should rejoin a customs union with the bloc earlier this year, despite his health secretary Wes Streeting saying the arrangement had “enormous economic benefits”.
The Labour leader said there was too much water “under the bridge”, particularly after the UK signed trade deals with the US and India which would potentially have to be unravelled for there to be any customs union deal.
But he said the UK could go “further” on the single market.
The Ukraine loan initiative, recently approved by the EU, could create opportunities for British defence firms to compete for contracts in return for a financial contribution from the UK which could reportedly reach up to £400m.
It is understood the payments will be determined by the value of contracts and will come from the UK’s ringfenced £3bn for Ukraine.
A government spokesperson refused to comment on ongoing negotiations.
