The European Union is pushing for a robust termination clause in its ongoing post-Brexit negotiations with the UK, a provision informally dubbed the "Farage clause" by diplomats. This legal safeguard is designed to protect the bloc from financial losses should a future British government, potentially led by Reform UK's Nigel Farage, tear up any new agreement.
The 'Farage Clause': A Financial Safeguard for the EU
According to a draft text seen by the Financial Times, the clause forms part of talks on a sanitary and phytosanitary (SPS) agreement aimed at easing post-Brexit checks on agricultural trade. The stipulation demands that any party withdrawing from the deal must cover the costs of re-establishing border controls and infrastructure.
These costs, which could run into billions of pounds, would encompass setting up infrastructure, equipment, and the initial recruitment and training of staff for border controls. EU diplomats see this as a necessary precaution against the possibility of a Reform UK victory in a future general election, given the party's threats to cancel any such UK-EU pact.
However, UK sources have pushed back against this characterisation. They insist the clause is a standard feature of international agreements and is reciprocal, meaning it would also oblige the EU to compensate the UK if it were the one to back out. A Labour source described such exit provisions as a basic staple of trade deals, calling attempts to frame them as a "democratic outrage" frankly exhausting.
A Stark Reminder of Brexit's Colossal Price Tag
The clause serves as a sharp reminder of the immense costs already incurred due to Brexit. In 2020, the EU established a €5.4 billion (£4.7bn) Brexit adjustment reserve to help member states manage the disruption caused by the UK's departure.
The fund was allocated to nations most affected to cover new customs, veterinary, and administrative controls not seen since before the single market's creation in 1993. The Republic of Ireland received the largest share at €920 million, while the Netherlands was allocated more than €800 million.
France spent at least €200 million of its €672 million allocation on deploying customs officers, border police, and inspectors at key ports like Calais and the Channel Tunnel. This included specialised checks for racehorses, a measure that alone cost Eurotunnel €20 million. The Netherlands hired over 900 new customs officials and 145 extra veterinarians for the port of Rotterdam, and Spain brought on an additional 860 employees for border points.
Complex Negotiations Lie Ahead
Formal negotiations on the SPS agreement are due to begin this month but are expected to be lengthy and complex. The deal is part of a wider "reset" package, which already includes a return to the Erasmus student exchange scheme agreed before Christmas.
Another challenging area is an agreement on the carbon border adjustment mechanism (CBAM), where hopes for a pre-Christmas deal were dashed. According to Anand Menon, director of the think tank UK in a Changing Europe, the EU's tough stance is predictable. "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," he said.
The European Commission and the UK government have been approached for comment on the ongoing negotiations and the specific details of the draft clause.
