The European Union is reportedly seeking guarantees that the UK will compensate the bloc if a future government reneges on the Brexit 'reset' agreement currently being negotiated by Prime Minister Keir Starmer. The so-called 'Farage clause' would require the UK to cover the costs of reinstating border controls and infrastructure if it withdraws from a proposed sanitary and phytosanitary (SPS) agreement on agricultural trade.
According to the Financial Times, a draft text of the SPS deal includes a termination clause requiring any party pulling out to pay for the reimposition of border checks. EU diplomats have nicknamed it the 'Farage clause' in reference to Reform leader Nigel Farage, who has threatened to cancel any such agreement if he wins a general election. The clause is seen as a safeguard against the UK reneging on the deal, which aims to remove post-Brexit checks on farm produce.
However, UK sources dismissed concerns, stating that such clauses are routine in international agreements and work both ways, meaning the EU would also have to compensate the UK if it backed out. A Labour source said: 'Exit provisions are a basic staple of any international trade agreement. Pretending these routine legal contingencies constitute a democratic outrage is frankly exhausting.'
Negotiations on the SPS deal are due to begin this month but may take months to complete. The EU previously set up a €5.4bn (£4.7bn) adjustment reserve in 2020 to help member states cope with Brexit disruption, with Ireland, the Netherlands, and France receiving significant funds for border controls. The 'Farage clause' could require billions in compensation if the UK withdraws.
Anand Menon, director of UK in a Changing Europe, said: '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 European Commission and UK government have been approached for comment.
