Philip Hammond backtracks after calling EU the enemy, but Brussels is clear Britain must make a better offer before talks can move on.
The row over Britain’s Brexit divorce bill descended into the rhetoric of war on Friday, as Philip Hammond described Brussels as the “enemy” and Jean-Claude Juncker said any gratitude for the UK’s military defence of the continent did not exempt it from paying its dues, insisting: “Now they have to pay.”
The chancellor made the accusation after a difficult week of talks between the UK and EU, which Michel Barnier, the EU chief negotiator, described as having reached “deadlock”.
Hammond swiftly backtracked, saying he regretted his choice of words and had meant to make the point that the UK cabinet should be united against the other side.
But his characterisation of the EU as an enemy risked further souring relations between Britain and Brussels at a time when both sides are now bracing for Brexit without a deal.
It came after Juncker, the president of the European commission, made it clear that the UK would need to put up more money to unblock the negotiations and allow them to move on to discussions about trade. The talks have stalled on several fronts but the senior EU official suggested the biggest reason was an inadequate financial offer from the UK.
Speaking to students at Luxembourg University, he turned up the pressure on Theresa May over the Brexit divorce bill by acknowledging Europe’s debt of gratitude to the country “during the war, after the war, before the war”, but adding: “Now they have to pay.”
With EU leaders meeting for a summit next week, he expressed his frustration at the British government’s failure to commit to honouring its financial obligations to the bloc on leaving it. May has so far offered to pay into the EU budget until 2020 and “our fair share of the costs” in specific policies and programmes.
But Juncker told students that the British position was untenable. “We cannot find, for the time being, a real compromise as far as the remaining financial commitments of the UK are concerned,” he said.
“As we cannot do this, we will not be able to say during the European council in October that now we can move to the second phase of the negotiations, which means the shaping of the British-European future. Things have to [be] done. One has to deliver.
“If you are sitting in the bar and you are ordering 28 beers and then suddenly some of your colleagues [are leaving without] paying, that is not feasible. They have to pay. They have to pay.”
In response, Iain Duncan Smith, the former Conservative cabinet minister and leading leave supporter, rejected the call for more money and made a dig at the senior EU official’s penchant for a drink by saying: “I think Mr Juncker knows a little bit more about the bar than many of us do.”
Duncan Smith is one of many Brexit supporters in parliament putting May under pressure to withstand calls to offer the EU more money.
A number of the most hardline leave supporters, including the former chancellor Nigel Lawson, would rather see the cash spent by the UK on preparing for the possibility of leaving the EU with no deal, which has led to calls for Hammond, the chancellor, to resign for refusing to put money towards this until the last possible moment.
Amid criticism from the right of his party, the chancellor turned up his anti-Brussels language in an interview with Sky News.
“My message is this: I understand that passions are high and I understand that people have very strong views about this but we’re all going to the same place. We all have the same agenda,” he said.
“The enemy, the opponents, are out there. They’re on the other side of the negotiating table. Those are the people we have to negotiate with, negotiate hard to get the very best deal for Britain.”
He later withdrew the comments, saying: “We will work with our friends and partners in the EU on a mutually beneficial Brexit deal.”
Speaking in Washington DC at the end of a week of cabinet in-fighting, Hammond was also forced to defend his position in the cabinet and dismissed those calling for him to be removed.
He hit back at claims from within the Conservative party that he was an “Eeyore” spreading doom and gloom about the post-Brexit economy. “I think that is a bizarre observation. I am very optimistic about the future of the UK economy. It is fundamentally strong,” he said.
The chancellor said: “It is absurd to pretend that the process hasn’t created some uncertainty in the business community. Businesses crave clarity about our future relationship with the EU and the sooner we get that clarity the better.”
He added: “As soon as the uncertainty lifts, which I hope will be in the next few months, we will see the UK economy powering forward and reaching its full potential.
“I’m committed to delivering Brexit and a Brexit that works for Britain, protects jobs and protects businesses, and allows people to get on with their lives.”
Asked whether he was upset about the calls for him to be sacked, the chancellor said: “There is a group of people who have very clear views about the outcome they want to see. It is not surprising that they will seek to make sure they get the outcome the want.”
The chancellor said he had already spent more than £500m on Brexit preparations and that more resources would be provided in the budget next month and during 2018.
Peter Dowd, a shadow Treasury minister, said Hammond’s remarks about the EU being an “enemy” were both foolish and a sign that he was “clearly feeling the pressure from Tory MPs calling for him to be sacked”.
“The tone of this rhetoric will obviously not unblock negotiations or help protect our economic interests,” said Dowd. “The chancellor should be putting the country before the infighting in his own party when he is representing us overseas, and refrain from acting like Basil Fawlty on holiday.
“It is vital that these negotiations do not lead to a situation where Britain crashes out of the EU without a deal, risking jobs and living standards. This weak government has squandered the past months of the Brexit negotiations, squabbling with each other rather than trying to get the best deal for Britain. If they are not up to the job then they should step aside and let Labour take over.”