The European Union is pushing for a robust termination clause in its post-Brexit "reset" negotiations with the UK, a provision informally dubbed the "Farage clause" by diplomats. This measure is designed to protect the bloc from significant financial losses should a future British government, potentially led by Reform UK's Nigel Farage, decide to abandon the agreement.
The 'Farage Clause': A Financial Safeguard for the EU
According to a draft text reported by the Financial Times, the clause would be part of a new sanitary and phytosanitary (SPS) agreement aimed at easing post-Brexit checks on agricultural trade. The core stipulation is clear: if either party withdraws from the pact, they must cover the costs incurred by the other side to re-establish border controls and infrastructure.
These costs could run into billions of pounds, encompassing expenses for new infrastructure, equipment, and the initial recruitment and training of staff for border controls. EU negotiators see this as a necessary safeguard, particularly given Reform UK's stated threat to cancel any such agreement if it came to power.
A Stark Reminder of Brexit's Colossal Cost
The clause serves as a potent reminder of the immense financial burden Brexit has already imposed. In 2020, the EU established a €5.4 billion (£4.7bn) Brexit adjustment reserve to help member states cope with the disruption caused by the UK's departure from the single market.
The allocation of this fund highlights the scale of the challenge:
- Ireland received €920 million.
- The Netherlands was allocated over €800 million, employing more than 900 new customs officials and 145 additional veterinarians for ports like Rotterdam.
- France spent at least €200 million of its €672 million share on deploying customs officers, border police, and inspectors in ports like Calais and the Channel Tunnel—infrastructure not needed for 30 years.
- Spain hired an additional 860 employees for border control points.
This fund was necessary to rebuild the very border apparatus that the new SPS deal seeks to simplify, making the EU keen to avoid footing the bill a second time.
Negotiations and Political Reactions
UK government sources have downplayed the significance of the clause, describing it as a routine feature of international agreements that "works both ways." They argue it would equally obligate the EU to compensate the UK if Brussels were to back out of the deal.
A Labour source echoed this, stating that such exit provisions are a basic staple of trade pacts and that portraying them as a "democratic outrage" was "frankly exhausting." Negotiations on the SPS agreement are due to begin this month but are expected to be complex and lengthy.
Professor Anand Menon, director of the UK in a Changing Europe think tank, provided context: "We shouldn't be surprised that the EU is playing hardball. After all, they have decided that we need these agreements more than they do. As such, they will extract every last concession."
The broader "reset" package, which also includes a return to the Erasmus student exchange scheme, remains under discussion, with a parallel deal on carbon dioxide emissions for goods also proving complicated.
