The Brexit secretary said any multi-billion pound payment to Brussels must be contingent on us getting a future trade deal – just moments after the Frenchman said the two issues could not be linked.
In a fiery appearance Mr Davis said there were now “no excuses” for his counterpart to block progress in the talks given the reassurances provided by Theresa May’s keynote Florence speech.
But Mr Barnier insisted there would be no “mixing up” of what he termed Britain’s “historic debts” to the bloc and subsequent negotiations on a future EU-UK trade deal.
The very public disagreement threatened to overshadow a mood of increased optimism in the aftermath of the Florence address, in which the PM also committed to a two-year transitional period on EU membership terms.
Mrs May’s promise that Britain would honour all its budget commitments up to 2020, backed up by conciliatory language about no EU member state having to pay more because of Brexit, won favour in European capitals.
But in the immediate aftermath the EU Parliament’s Brexit coordinator Guy Verhofstadt warned that the bloc would want to see detail on how that payment would be made before deeming it sufficient.
And Brussels is now likely to object to Britain’s more detailed terms, which suggest that the UK Government would not formally sign off on a financial settlement until after trade talks have at the very least been opened.
At a press point in Brussels to mark the opening of the fourth round of negotiations, a combative Mr Davis said: “We do not want our EU partners to worry that they will have to pay more or receive less over the remainder of the current budget plan as the result of our decision to leave.
“The UK will honour its commitments we’ve made during the period of our membership. But it’s obvious that reaching a conclusion on this issue can only be done in the context of, and accordance with, a new deep and special partnership with the EU.
“So the UK is absolutely committed to work through the detail. We’re laying out concrete proposals and there are no excuses for standing in the way of progress. It will take pragmatism on both sides to make headway.”
The British side believe it is unrealistic to expect them to part with billions of pounds in taxpayers’ cash – the EU is asking for up to £90 billion – without securing assurances on trade.
But the EU is adamant that the financial settlement simply covers “historic debts” Britain has already signed up to – even if the money has not yet been spent – under its seven year budgetary cycle.
And in equally defiant mood, Mr Barnier hit back: “We’re not going to mix up discussions on debts and discussion on the past commitments. We’re not going to mix up those subjects which are part of the orderly withdrawal with a discussion on our future relationship.
“Real progress on the three main issues – citizens, Ireland, financial settlement – is essential to move to the discussion on the transition as well as on the future. These are separate issues.”
However, in the slighest hint of a compromise Mr Barnier then suggested there could be a “logical link” drawn between the spread of payments for such a Brexit bill and a future transition, which would include separate budget contributions.
During a press conference shortly before Mr Davis’ arrival the Frenchman was also in bullish mood about a proposed transitional period, insisting it is Britain that is asking for one not the EU.
Mr Barnier said any stop-gap measure, which would extend the UK’s unfettered access to the Single Market and Customs Union, has to be fully in accordance with current membership obligations.
The PM had appeared to sign up to such a deal in her Florence speech, but it has since emerged that members of her Cabinet are trying to pick holes in it by demanding an exception on full ECJ jurisdiction.
But Mr Barnier insisted: “If the idea is during this period the UK will still participate in the Single Market and the Customs Union then it is quite clear that all European regulations, enforcement, financial conditions, supervision, all of that has to be maintained without exceptions.”