LONDON — Negotiations are finally underway for Keir Starmer’s much-hyped Brexit reset. Expect to relive some trauma.

Six months ago, the British prime minister came to a “common understanding” with the EU at an all-smiles summit in London.

The two sides — keen to move on from years of bad blood over Britain’s 2016 exit from the bloc — vowed to smooth trade in food and electricity. They’d make it easier for young people to live abroad, link their carbon markets, and cooperate more closely on defense.

And they would round the harder edges off Tory Boris Johnson’s controversial Brexit settlement. The pesky details, they agreed, would be sorted out over the coming year.

Six months on, getting down to brass tacks is proving tricky. And as ever, much of the disagreement comes down to money.

Proliferating demands

The early stages of talks have been dogged by what the chair of the U.K. parliament’s European Affairs Committee calls “proliferating EU demands for U.K. cash.”

Brussels wants London to pay up as part of the planned agri-food agreement. It wants payments for the Erasmus student scheme, money for the electricity trading agreement, and cash for access to the SAFE rearmament scheme.

Last week, EU member states agreed among themselves that London should be paying into EU “cohesion” funds — money that would level out inequalities between different EU member states.

To an extent, the U.K. was prepared for improved access to EU markets to come with a price tag.

Brexit Minister Nick Thomas-Symonds has accepted that Britain would have to make contributions to cover “the cost of administration” and pay its way in schemes that involve pooling resources — though always with a “careful analysis of value for money.”

But he’s also been clear that the U.K. “would not make a general contribution into the EU budget” as part of the reset.

To anyone who’s read a British newspaper recently, the context in Westminster is obvious. Later this month, Chancellor Rachel Reeves will deliver a painful government budget expected to be stuffed with tax rises and spending cuts.

With Reeves digging around behind the back of the sofa for spare change, the optics — and budgetary wisdom — of forking over billions to the EU would be open to question.

Taking care

There are even those on the EU side who are concerned that asking the U.K. to write so many cheques might have consequences for the cross-Channel relationship.

Last week, a minority of member states, including Germany, Belgium, the Netherlands, and Ireland, launched a bid at an EU ambassadors meeting to tone down language on demands for British contributions to cohesion funds.

The countries were concerned that pushing too hard might undermine relations to the extent that parts of the Brexit reset that they want to happen — in particular, an agreement on electricity trading — get kicked into the long grass.

“We made an agreement in May, that should be the foundation for our conversation,” one cautious EU diplomat told POLITICO. Like others quoted in this article, they were granted anonymity to discuss the ongoing talks.

“So we shouldn’t then in November come back and try to add to it the contributions to cohesion funds that we didn’t agree in May, even if that’s the principle that we feel is warranted. We have to take care of our relationship with the U.K.”

As softly as some countries want to play it, all agree that such contributions will ultimately be necessary.

“You cannot as a third country enjoy benefits that put you in a more favorable position than EU members,” a second EU diplomat told POLITICO.

“Throughout the years all third countries with access to the single market have had a requirement to provide budgetary contributions to the cohesion fund … that has always been our approach.”

In the end, a compromise wording asks the European Commission to “reflect upon the appropriate level of financial contribution” that London should make, while fast-tracking electricity trading talks to start by the end of the year.

The hope is that the agreed position will mean talks can move along at speed, while making clear to London that it is expected to pay for any benefits it gains.

Playing it SAFE

But there are already signs that the EU’s emphasis on Britain bringing its wallet to talks is holding things up.

Talks over U.K. participation in the EU’s SAFE rearmament scheme — meant to bolster European defense in light of the war in Ukraine and Donald Trump’s ambivalence — got going in May.

Six months on, the question of cash is still unresolved. Brussels wants around €4.5 to 6.5 billion in exchange for U.K. participation, according to two EU diplomats.

Peter Ricketts, the veteran British diplomat who chairs the U.K. parliament’s European Affairs Committee, described the demand as “unbelievable.”

“This is a loan scheme. The government are willing to contribute to the costs of running it. But a €6.5 billion fee is so off the scale that it suggests some EU members don’t want U.K. in the scheme,” he said.

Downing Street said Keir Starmer told Commission President Ursula von Der Leyen on a call last week that “any deals must result in tangible benefits to the British public.”

Deadline time

While the wrangling over cash is holding things up, deadlines are approaching. The U.K. government has set itself the goal of getting the planned agri-food agreement online by 2027 so voters can begin to feel the benefits at supermarket checkouts ahead of the next election.

Similarly, if talks on linking emissions trading systems are not concluded by the end of the year — or a temporary bridging deal struck — then British firms will start to be hit by new EU carbon border taxes from Jan. 1.

In both cases, the question of cash will need to be dealt with.

The hope expressed by chief EU negotiator Maroš Šefčovič is that most topics can be cleared by the time next year’s U.K.-EU summit rolls around — though no date has been nailed down.

There’s likely to be “a bit of back and forth during the negotiation” and maybe even some “drama,” the second EU diplomat quoted above reckons — judging it to be “the British negotiating style.” But, ultimately, hopes are still high that the reset can deliver.

“There would be absolutely no surprises,” the diplomat added. “They know us very well, we know them very well.”

Jacopo Barigazzi also contributed to this report.