UK said to accede to EU demand Brexit talks focus on split

[BRUSSELS] Prime Minister Theresa May's government has bowed to European Union demands to focus the initial stage of Brexit talks on the terms of the UK's departure rather than trying to arrange a future trade relationship at the same time, according to two EU officials with knowledge of the preparations.

The concession sets the tone for negotiations over Britain's withdrawal from the EU that are set to begin in Brussels on Monday.

Almost a year after Britain voted to leave its biggest market, the talks come amid signs the UK is softening its approach to the split and adopting a more conciliatory tone. Mrs May's office referred calls to the Brexit department, which had no immediate comment when asked about the sequence of talks.

"We've set out the broad principles from where we will start the negotiation and we will negotiate in good faith, but it is a negotiation and we recognise there will be an exchange of views and we will take that forward in a spirit of genuine cooperation," Chancellor of the Exchequer Philip Hammond told reporters in Luxembourg on Friday.

The EU's chief negotiator, Michel Barnier, has long argued that the initial talks should center on brokering deals on citizens' rights, money owed by the UK and the border between Northern Ireland and the Republic of Ireland.

Only if "sufficient progress" is made on those thorny topics will he allow discussions to turn to the trade deal that Mrs May wants. There must be unanimous agreement by the EU's 27 other members for that to happen and officials have said that's only likely to come in October at the earliest.

German Finance Minister Wolfgang Schaeuble said in a Bloomberg Television interview this week that as soon as "the principles" of Brexit are agreed, talks can move on in parallel to "the details of the regulation, and what will be the further relations between the UK, after Brexit, and the single market and the European Union, and so on".

"Let's start the negotiations, and at the end we will always come to reasonable decisions," he said.

Mrs May previously wanted the trade deal to be discussed in tandem with the split given the lack of time on hand and to win trade-offs, grant certainty to businesses and maintain support for Brexit back home. Her Conservative Party called such an arrangement "necessary" in its election manifesto.

Mr Barnier and British Brexit Secretary David Davis will open the talks on Monday at 11 am in Brussels with the aim of wrapping up a deal by the end of 2018 so that it can be ratified by the European and British parliaments before the UK leaves the bloc in March 2019.

Mrs May's strategy was thrown into confusion by last week's election in which she squandered her Conservative Party's parliamentary majority. That's raised speculation that she will seek a softer Brexit by trying to win continued access to Britain's biggest market.

Mr Hammond, who may be in the vanguard of the shift, said in Luxembourg that he favours a "pragmatic" Brexit that safeguards jobs and the economy.

BLOOMBERG