The UK government has insisted it will pay “no more than it needs to” in its divorce settlement with the EU, playing down a report that it would offer £36bn if the bloc agreed to start negotiating a post-Brexit trade deal. The report that the UK is prepared to make a significant payment immediately drew fire from Eurosceptics, who insist that the UK has no obligations to the EU after it leaves in March 2019. “As the secretary of state for Exiting the European Union has made clear, we will meet our international responsibilities but the UK will not pay more than it needs to,” said a government spokesman.

A report in the Sunday Telegraph UK said the UK planned to offer £36bn — or €40bn — partly in the form of continuing budget contributions during a three-year transition deal after Brexit. But the offer would be conditional on the EU abandoning its strict sequencing of the negotiations, under which officials have refused to discuss trade until a settlement is agreed on citizens’ rights, the divorce bill and Northern Ireland. The suggestion of a possible future payment prompted a furious reaction from some Eurosceptics. Jacob Rees-Mogg, MP for North East Somerset, said that there was “no logic” to the £36bn figure. “Legally, we owe nothing,” he wrote.
John Redwood, MP for Wokingham, told LBC Radio that the idea the UK had to pay the EU to secure trade talks was “just ridiculous”. “Ministers would be quite wrong to be talking about any figures,” Mr Redwood said. “We don’t owe them any money.” One person at the European Commission stressed the EU’s view that the UK would need to cover “all commitments made by the United Kingdom as a member state of the EU”. This reflects the EU’s belief that Britain is liable for a share of spending from the EU’s multi-annual budget, even after the UK leaves. The person declined to speculate on the size of the UK’s obligations to the EU on exit. The controversy underlines the depth of the continuing divisions within the government over Brexit strategy.

Philip Hammond, the chancellor, has been leading a push towards making Brexit as smooth as possible, with a transition period as long as three years to ease the country out of arrangements such as the European Single Market and customs union. But the angry reaction to the prospect of making a big financial settlement, which many regard as a near-inevitable part of departing from the bloc, illustrates how the government also faces opposition from anti-EU voices. The point is a reminder of the EU’s demand that the two sides devise a methodology for working out the UK’s obligations, rather than discussing total sums.

The UK has resisted that approach, fearing that agreeing to the wrong methodology might leave the UK exposed to an unexpectedly vast bill. The Brussels source also dismissed the article’s account of a potential comprehensive deal wrapping in the size of the divorce settlement and a future trade deal as running counter to Brussels’ plans for the talks timetable. “As a reminder concerning the sequencing: first the divorce, then the future relation, once sufficient progress has been established on the key issues like citizens’ rights and the financial settlement,” the person said.