EU summit approves Brexit negotiation stance

European leaders are warning Theresa May over her “completely unreal” expectations of a swift trade deal, as they gathered in Brussels to agree a tough opening stance on Brexit talks.

Jean-Claude Juncker, the European Commission president, briefed an EU summit on Saturday on a recent dinner where the British prime minister said any Brexit exit payment would only pass before 2019 if accompanied by a full trade deal.

Her demands for a fully fledged agreement at unprecedented speed have alarmed some EU leaders, who had interpreted Mrs May’s letter starting the Article 50 process as only expecting a more preliminary deal on the “future framework” by the point of Brexit.

After sitting down for lunch on Saturday, European leaders took less than a minute to adopt their relatively tough negotiating guidelines, prompting spontaneous applause around the table.

These foresee no prospect of a trade deal with Britain before 2019 and lay down a “phased approach”, requiring progress on financial liabilities and citizen rights before talks on the shape of future relations can begin.

“There’s absolutely no question about it, but before discussing the future we have to sort out our past and we will handle it with genuine care but firmly,” said Donald Tusk, the European Council president, as he arrived at the Brussels summit.

The morning after his dinner at Downing Street, Mr Juncker called Angela Merkel, the German chancellor, to relay his concerns about impossible expectations in London. Shortly afterwards Ms Merkel warned that some in London still harboured “illusions” about what Brexit could achieve.

To physically demonstrate the complexity of trade agreements, Mr Juncker brought a hard-copy of the full EU-Canada trade agreement to Downing Street, a door-stopper document running to around 2,255 pages.

David Davis, Britain’s Brexit secretary, responded by stressing that an agreement would be simple because EU and UK rules were aligned from the first day, according to officials familiar with the discussions.

Michel Barnier, the EU’s chief negotiator, and Mr Juncker returned from London on Wednesday also struck by optimistic British expectations on the pace of divorce discussions. While Mrs May’s team suggested progress on citizen rights and the exit bill could be possible by the end of June, EU diplomats see the autumn or December as more likely.

Attendees at the dinner told colleagues Mrs May’s expectations were “completely unreal”. Another senior diplomat said Mr Juncker and Mr Barnier have reported “a lack of realism in terms of sequencing and timelines” from their talks at No 10. They were “not alarmist” in their assessment of Mrs May’s strategy but the clear view was that the two sides were far apart.

Although no changes were made to the EU’s negotiating guidelines at the summit, Mr Tusk invited Mr Barnier to directly hear the priorities and concerns of EU leaders. Diplomats said the summit presented an opportunity to gauge whether leaders were resolved to enforce a strict approach as negotiations proceed, especially if phased talks become dangerously bogged down in coming months.

Mark Rutte, prime minister of the Netherlands, has been in a minority arguing it should be possible to “swiftly” start talks on future relations if progress is made in the first phase of the talks.

“It is important that we get agreements as soon as possible on issues like the Irish border, the divorce bill, we are talking serious money. We have to talk about citizens’ rights,” Mr Rutte said.

“As you get to a certain level, as far as possible and say now we are confident about this, then we have to swiftly start talking about the future relationships — trade and also politics.”

But other member states have been more uncompromising. France and Germany have raised expectations, for instance, on what would be required in a financial settlement.

Wolfgang Schäuble, Germany’s finance minister, warned in advance of the summit that London must understand it cannot have advantages in its EU relations after Brexit that its member states don’t have.

“There is no free lunch. Britons must know that,” Mr Schäuble told the Funke media group. “We don’t want to weaken Britain. But we also don’t want that the rest of Europe is weakened. Britain should not have advantages after the exit, that other countries don’t have.”

Charles Michel, Belgium’s premier, warned that London might seek to set a trap for the EU27 by attempting to break their unity. “A Brexit for free is not possible,” he told reporters in Brussels.

“Maybe the British government will do its utmost to split the 27 nations and it is trap we need to avoid. But what counts is the content, with common sense to make it make positive for all. But on the other hand, if you are no longer part of a club, it has consequences.”

The Brexit summit comes amid anxiety that a victory in the French presidential election for Marine Le Pen, the anti-EU far-right candidate, could trigger a new euro zone crisis and take a second large member state out of the bloc.

Emmanuel Macron, the centrist pro-European favourite, retains a big lead in polls but there are concerns that Ms Le Pen could spring a surprise win.

François Hollande, whose dire ratings led him not to seek a second term as French president, said “it’s a risk” that France would follow Britain out of the EU if Ms Le Pen wins. The vote will determine “whether the French people should fear an exit from the EU,” Mr Hollande said.

“We can see with the Brexit affair, there is no more protection, no more guarantees, no more internal market. For a country that is a member of the eurozone, there is no more single currency.”