The next UK-German monetary struggle is brewing

London

THE next big European struggle between Germany and Britain hinges on money. This is the key to a prime question hanging over British negotiations to leave the European Union: the amount of help that Germany will give the UK to secure an acceptable deal both on the exit and the future relationship. At present, Britain pays in to the EU an annual gross sum of around £13 billion (S$23.7 billion) - including the rebate secured in the 1980s but not including EU payments made to the UK of £4.5 billion. The greater the assurance that Britain can pay a similar figure during a two to three-year transition period after the UK leaves the EU in April 2019, the smoother will be the path of agreement with Germany.

Berlin, as the main EU budgetary contributor, is relying on an acceptable bridging deal with the UK to prevent an uncomfortable funding shortage later in the decade. The problem for Prime Minister Theresa May is that any proposal for the UK to pay, say, £10 billion per year over three years from 2019 would be anathema to many influential Conservative backbenchers - as well as several key ministers within her Cabinet. This could not only scupper the exit process but also bring down her government.