Simon Usherwood / Nov 2025
Image: Shutterstock
The return of significant EU-UK negotiations – on food rules and emissions trading - this week marks an important step for turning the warm words of May’s summit into material cooperation.
But this has come after much delay as the two parties tangle with the financial dimensions of this new work. Member states are reportedly torn over the extent to which they will insist on British contributions to the EU budget, while the British are baulking at the size of management fees for participating in SAFE, the most pressing item in talks.
At one level, none of this should be a surprise.
Both sides have clear interest in minimising their own expenditure and in trying to move costs on to the other, especially when public budgets are tight. We saw exactly the same thing happen in 2023, when then Prime Minister Rishi Sunak lead on British participation in the Horizon Europe research programme; despite both sides being very positive about this, talks took some seven months to resolve the size of UK financing.
But the risk is that work to improve relations becomes a hostage of finances and value is calculating purely in monetary terms.
Try to see it my way
There is no better demonstration of this than with the largest EU-UK financial relationship of recent years, the resolution of financial obligations under the Withdrawal Agreement.
Largely unseen against the travails of the Northern Ireland Protocol, the liabilities arising from UK membership of the EU were quickly and constructively resolved in negotiations. This included commitments to multi-annual spending programmes, shared assets as well as long-running futures for things like pensions of British nationals who worked for the EU’s institutions.
Since 2020, this system has worked very smoothly and in line with broad expectations. Moreover, it has attracted almost no media or political attention in the intervening period.
More recently, there have been some questions over the size of the total liability, but it remains within the broad expectations of €40 billion, of which €30 billion has already been paid, as seen in the Commission’s annual report on the EU budget.
The success of this process lies in the shared agreement about the underlying principles of what obligations exist on both sides. The Withdrawal Agreement treaty itself does not contain a specific figure for UK payments but rather a set of processes for measuring different elements and the UK’s liabilities for them.
As a result, specific totals have been calculated on this basis. British valuations ranged from £30 billion to £39 billion, while the Commission’s evaluation was just over €40 billion.
Since then, various revisions have been required, driven by factors as varied as the relative size of the UK economy to that of the EU27, the success (or not) of British applications for EU funding (and their spending of that funding) and a number of cases before the EU’s Court of Justice. These latter have various generated penalties for British infringements of EU rules and payments back to the UK for infringements caused by companies during the period of UK membership.
The key point is that these shifts have not been arbitrary, but instead work from a shared understanding and interpretation of the treaty text.
As the UK has tried to rebuild trust with the EU in the wake of the Johnson premiership, the assiduous follow-through on financial provisions has been an important marker of good faith being more than just words.
Life is very short, and there's no time
Which brings us back to the present situation and a new set of negotiations.
The arguments on the EU side about the British pursuit of good value undermining good faith are overstated at this point in proceedings: in the absence of either side advancing a developed proposition about the principles underpinning finances, it is hard to claim devious behaviour.
Moreover, this risks overshadowing the wider logics that have driven the package of work contained in the new Strategic Partnership.
These include the potential positive economic effects for Europe’s economies, the need to deepen cooperation in the face of Russian aggression and the uncertainty generated by the Trump presidency in the US.
As the recent Lords European Affairs Committee report put it, May’s summit was a good start, but much more needs to be done. Getting lost in financial arguments will ultimately not serve either party’s interests.
