HARDLINERS in Germany are blocking the European Commission’s chief Brexit negotiator from opening trade talks with the UK, diplomats have claimed.
According to reports, Michel Barnier, who is heading the Commission’s Brexit team, is pushing for trade talks to begin as soon as possible.
But sources in Brussels have said that Angela Merkel’s government in Berlin, which has been significantly damaged after big electoral losses last month, is holding out for Britain to agree to pay a massive divorce bill of up to £78billion.
Mrs Merkel is worried that Germany will have to pick up the bill when the EU loses Britain’s net contribution of more than £10billion a year.
She is understood to be unhappy with Theresa May’s generous offer to keep paying contributions during a transition period.
A diplomat reportedly told a Brussels correspondent: “Germany wants more and it wants it more or less in writing. That is toxic for the British.”
A Brussels source has suggested that Mr Barnier has instead advised that while “sufficient progress” has not been made to move on to talks the “positive atmosphere” following Theresa May’s speech in Florence means that second stage talks should begin.
The shift in Mr Barnier’s position comes amid rising panic in Brussels that Britain is serious about walking away from talks.
With the UK preparing for “no deal” and walking out of talks if trade discussions have not opened by the end of the year, Mr Barnier has finally realised that a hardline approach of demanding guaranteed money could be disastrous for the rest of the EU.
The bloc has a trade surplus with Britain worth more than £70 billion and could end up paying at least £13 billion in tariffs to the UK if the future relationship moves on to World Trade Organisation (WTO) rules.
In contrast Britain would only pay £5 billion to Brussels and would have enough extra cash to subsidise exporters who face losing out in the event of no agreement on trade.
Meanwhile, progress has been made for future free trade relations with New Zealand after a deal was struck to share quotas of cheap lamb between Britain and the eU.
Restrictions on how many products can be imported into the EU on favourable rates are set across the bloc and concerns have been raised internationally that exporters could take a financial hit when the UK quits.
However, the government has agreed with Brussels to divvy up the numbers of goods that can be brought in on low or zero tariffs based roughly on current rates.
It would mean products like lamb, which are imported into the UK in higher numbers than other parts of the bloc, would continue to be traded in similar numbers.
International Trade Secretary Liam Fox said the deal showed "real progress" and was part of the government's plans to minimise disruption to global trade.
Dr Fox said: "As an international economic department, we've been working closely with the European Commission to prepare for our withdrawal from the EU in order to minimise any disruption to global trade.
"Our agreed collaborative approach shows real progress on how UK Government intends to take forward our future trading arrangements with the world.
"This is the start of our open and constructive engagement with the WTO membership and sets out our intentions regarding EU quotas to forge ahead and establish the UK as an independent WTO member."
Tory MEP David Campbell Bannerman, who sits on the European Parliament trade committee and the Brexit steering group, said the reports of Mr Barnier pushing to move on to trade were “credible.”
He said: “I think the penny is beginning to drop that Britain could walk out of these talks and go for no deal.
“Ministers have made it clear to me that the EU will not get a penny from the UK if that happens and I suspect Mr Barnier understands that.”
But a spokeswoman for the European Council, which represents the member governments, appeared to push the German case that trade talks should not start because it would mean a change of mandate for Mr Barnier’s team.
But she added: “The EU is at its best when it’s working towards a compromise and of course there is a very good basis for us to hope that we will find such a compromise between the UK and the EU.”