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Theresa May admits for the first time that Brexit negotiations have been in ‘difficulty’

Theresa May has admitted for the first time that Brexit negotiations have hit “difficulty” as she beseeched European leaders to give her a deal she can sell to the British people.

The Prime Minister explicitly conceded last night that talks were in trouble ahead of her key intervention in Florence two weeks ago, prompting her to try and get negotiations back on track.

She told Angela Merkel, Emmanuel Macron and other EU leaders that there is now the “urgent” need for progress with the threat of the UK crashing out of the EU without a deal looming.

Speaking on Thursday evening at a working dinner with other heads of government in Brussels, Ms May said that at the end of the summer she “recognised the difficulty the process was in”.

“I took stock, listened to what the people in the UK were saying, and what my friends and partners in Europe were saying, and I made a step forward,” she said.

The Prime Minister, who is attending a meeting of the European Council, told leaders that the Florence speech was designed to break the deadlock she had identified and called for a new “joint effort and endeavour”.

“There is increasingly a sense that we must work together to get to an outcome we can stand behind and defend to our people,” she said, adding that when the 27 remaining member states convene tomorrow to discuss Brexit in private “the clear and urgent imperative must be that the dynamic you create enables us to move forward together”.

The PM and world leaders dined on gnocchi and pheasant supreme at the dinner, followed by fresh pineapple.

European Commission chief negotiator Michel Barnier has repeatedly said he is “worried” about “deadlock” in negotiations, but the line from the UK government has always been significantly more optimistic, stressing “concrete progress”.

The PM’s intervention comes as the European Council appears set to refuse to allow the UK to move to trade and future relationship talks – which it has said can only start once “sufficient progress” has been made on settling the divorce bill, Northern Ireland border, and EU citizens’ rights.

The 27 remaining EU leaders will meet tomorrow to discuss Brexit without Ms May, whose address to dinner was not followed by any discussion or debate.

They are expected to tell Britain to come back in December once more progress has been made for another assessment of whether it is ready for trade talks.

Senior UK government officials also admitted that the prime minister was “working against a difficult political backdrop” at home – an apparent reference to Tory MPs who were pushing her for a no deal.

Arriving at the summit on Thursday Angela Merkel said she believed there were “encouraging” signs that sufficient progress could be made in December. Ms May said the summit was a time to take stock of the progress that had been made in talks so far.

Dutch prime minister Mark Rutte however told reporters in Brussels that Ms May had to “come up with more clarity on what she means by ‘other commitments’ in her Florence speech”.

“I phoned her last week, and tried to encourage her to do that and so far she hasn‘t,” he said.

The Prime Minister’s spokesperson told journalists in Brussels: “The Florence speech intended to create momentum and we achieved that. In all our talks with EU leaders they have been responsive and we hope that will continue.”

Other issues such as forest fires and migration have dominated the first day of European Council discussions, with Britain’s departure not even getting a mention in the first press conference between Jean-Claude Juncker and Donald Tusk after hours of talks.

Latest Brexit News: Does the UK owe the EU money?

Legal and political considerations are obviously intertwined in the debate about a financial settlement as the UK prepares to leave the EU. But it is possible to separate them in some respects.

Article 70 of the Vienna Convention on the Law of Treaties states that the termination of a treaty… “does not affect the right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination”.

In other words, as the EU would argue, your obligations only come to an end on the day of the termination of an international treaty – the “get-out clause” doesn’t apply to obligations made before you leave.

But – and it is a big but – there is a crucial caveat. Those terms apply under the Vienna Convention “unless the treaty otherwise provides or the parties otherwise agree”.

And the treaty in question – the Treaty on European Union (TEU) – does provide otherwise, in the form of the famous Article 50. So Article 50 of the TEU trumps Article 70 of the Vienna Convention.

Now, Article 50 doesn’t say anything about money or rights or obligations. So, in this interpretation, the UK would not be required to pay anything if there were to be no withdrawal agreement, because the treaty itself says nothing about any such payments.

Article 50 says “the treaties shall cease to apply to the state in question” either when a withdrawal agreement takes effect, or two years after the Article 50 process has been triggered by the member state that intends to leave. This is the ticking clock.

An in-depth report on this debate, issued by the House of Lords, acknowledges that there are “competing interpretations” on what the UK should pay, but it reaches the conclusion that, because the European treaties do not say anything on the matter, there would be no enforceable obligation to make the UK pay any financial contribution at all.

The Lords has taken the view that Article 50 is in effect a “guillotine” and the UK would be free to walk away without any responsibilities should agreement not be reached. But, and we’ll come back to this, it warns that there would be a price to pay.

It is also important to emphasise that these are largely uncharted legal waters and some kind of legal challenge at an international level would probably be made. The EU itself could not bring a case against the UK at the International Court of Justice (ICJ) in The Hague, because it is not a sovereign state.

But the remaining 27 member states – acting either individually or collectively – could in theory appeal to the ICJ, or to another relevant international tribunal. They would want their money back.

And this is where we have to get back to politics. No deal on money would mean “no deal” on any of the other issues being negotiated under Article 50, such as the rights of citizens and the future of the border between Northern Ireland and the Irish Republic.

Walking away with no agreement would also do significant reputational damage to the UK – if we can’t trust you on past obligations, EU officials would argue, why should we trust you on future ones?

That is why the British government says it wants a deal and it accepts that it does have financial obligations to meet. The trouble is there’s no agreement so far on precisely what those obligations are.

In conclusion, it is easy to say – in isolation – that the UK has no legal obligation to pay anything at all. But the reality is that such a provocative move would cause far more problems than it would solve.

Most leading Brexiteers acknowledge that, and accept (with varying degrees of reluctance) that the UK should pay something as a gesture of goodwill. On the EU side it is seen as rather more than that – it is a prerequisite for any deal to succeed.