Philip Hammond “does not recognise” European Union demands for Britain to pay a Brexit “divorce bill” of up to 60 billion euros (£50bn) after Article 50 is triggered next week, a source close to the Chancellor has said.
It comes after the Times reported that Brexit-backing Cabinet ministers want Mr Hammond to cap any exit settlement at a maximum of £3 billion.
At the weekend t he Chancellor accused Brussels over “overstating” its position ahead of the negotiations, which will begin after Theresa May invokes Article 50 on March 29.
A source close to Mr Hammond drew attention to those comments, adding: “We don’t recognise the 60 billion.”
The issue of an exit bill will be one the early priorities in negotiations as some EU figures, including European Commission chief negotiator Michel Barnier, have suggested the UK must settle its outstanding liabilities before talks on a new relationship can begin.
Foreign Secretary Boris Johnson has already publicly urged Mrs May to resist a large payment, while International Trade Secretary Liam Fox has dismissed the idea as “absurd”.
Discussion of the divorce bill is likely to dominate the coming weeks after Mrs May confirmed her intention to initiate Britain’s exit next week and then “negotiate hard” for a good deal.
The Prime Minister’s letter officially notifying the European Council of the UK’s intention to quit under Article 50 of the EU treaties will set in train a two-year negotiation process expected to lead to Britain leaving the EU on March 29 2019.
Brexit Secretary David Davis said the move would initiate “the most important negotiation for this country for a generation”, with the Government aiming to secure “a new, positive partnership between the UK and our friends and allies in the European Union”.
But on Monday, sterling dipped on the news, giving up gains and slumping against the dollar to 1.23. The pound also dived against the euro, trading 0.1% down at 1.15.
European Council president Donald Tusk confirmed that he will present draft Brexit guidelines to the remaining 27 member states within 48 hours of notification.
The EU27 are then expected to stage an extraordinary summit within four to six weeks to agree a mandate for Mr Barnier, with talks probably beginning in earnest in May or June.
Mrs May is due to visit all four nations of the UK before triggering Article 50. She will address MPs in a statement to the House of Commons following her regular weekly session of Prime Minister’s Questions on March 29.
She was cleared to take the step when the European Union (Notification of Withdrawal) Act gained royal assent last week, after a Supreme Court ruling forced her to seek the approval of both Houses of Parliament.