EU will play hardball with UK over Brexit, ex-diplomat warns

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European Union countries will want to play "hardball" with the UK over Brexit and refuse to strike a free trade deal unless it contributes to the Brussels budget during a transition period, the former ambassador to the EU has said.

Sir Ivan Rogers, who quit in January after telling Theresa May that Brussels diplomats thought it might take 10 years to reach a deal, predicted the issue of money would come to a head at a "gory" EU summit in Autumn 2018.

The Prime Minister wants to strike a new free trade deal with the EU after Brexit but also avoid a "cliff edge" for businesses faced with adjusting to new arrangements, and ministers have acknowledged that a transition period may be necessary.

Sir Ivan said that in the EU "the key players, the key officials, the key technocrats, the key theologians" think a new relationship may not be agreed until 2022 even if negotiations proceed "unprecedentedly fast".

And before that deal is struck, European countries may want to keep hold of "British dosh" during a transition period to avoid a squeeze on the Brussels budget.

His comments come amid reports that the EU is seeking a 60 billion euro (£51 billion) "divorce deal" before negotiating a new free trade agreement.

Appearing before the Commons Brexit Select Committee, Sir Ivan said: "From all the (EU)27 (countries), albeit in different ways, depending on whether they are net recipients or net contributors, the budgetary issue now comes to the fore.

"And I think we can expect a number of them to think - well, if the British want a future trade deal, and they want some form of transitional arrangement before a future trade deal, all big ifs, then this will come together at some gory European Council in the Autumn of 2018 and it will come together with the money equation.

"There will be some who will want to play hardball and say, 'well, absent British money over a transitional period, why the hell should we give them any trade deal?'

"I'm not saying that's a majority view, I wouldn't be in a position from my discussions before Christmas to know exactly where people will come out on that, it was very early days there, pre-Christmas.

"All I was conscious of from all of the discussions I was having with opposite numbers was there was a hell of a lot of work going on in the undergrowth to examine the implications of a UK exit on the budget."

Sir Ivan also warned that the EU was unlikely to agree specific deals for certain industries, like car manufacturing, which are highly dependent on Europe-wide supply chains.

He said German Chancellor Angela Merkel will be under pressure from sectors like the German automotive industry, which exports heavily into the UK, to get a good deal for them.

But she has repeatedly said "no sectoral interest will be put above the general interest", Sir Ivan said.

"Well, with Merkel, if she's still there, the unity, the unity of the 27, will win out and I think she and others will agree that there will be no sectoral deals in either the single market or the customs union, and I expect that to appear in either the guidelines or the negotiating mandate," he told MPs.