Brexit fury as Brussels demands UK pays into EU budget to seal 'reset' deal

A diplomatic row is brewing between London and Brussels over EU demands for the UK to pay into its budget for the first time since Brexit. EU member states want the UK to contribute to the bloc's regional levelling up funds in return for dropping checks on animal and plant products and allowing cheaper energy trading.

European officials say there should be no exceptions for the UK, given that Norway, Switzerland and other partners have to pay for certain trading privileges. In May, Sir Keir Starmer and the European Commission president Ursula von der Leyen promised a "historic" reset of relations at a summit in Windsor. The meeting sought to improve economic and political relations between the two sides following the acrimonious fallout over Brexit.

A provisional deal was agreed at the summit, covering a range of issues that included defence, fishing, trade in food products and a youth mobility scheme.

The scheme would allow young people to move and work freely throughout the European Union.

However, the new detente between London and Brussels appears to have hit the buffers, with EU diplomats questioning the "good faith" of UK negotiators.

"Third countries that want access to the EU internal market pay," an EU diplomat told the Financial Times. "You can't have the benefits of membership when you are not a member."

Another area of contention is defence and in particular the UK's possible participation in the EU's €150 billion SAFE defence loan scheme.

Currently, EU countries can spend up to 35% of the money with UK companies, a figure which could rise to between 50% and 65% if Britain joins up.

However, to gain full access to SAFE, the UK would have to fork out €4 billion or €6.5 billon respectively - according to documents seen by the Financial Times.

A UK government spokesperson insisted that London is working with the EU to implement the package agreed at the Windsor summit.

"Nothing has been agreed, and we will not give a running commentary on ongoing talks," they added.

An EU statement reiterated that the summit marked a new dawn in relations with the UK that culminated in a series of agreements "that will promote prosperity on both sides of the Channel and strengthen co-operation on common priorities."