The EU is demanding that a future British government pay significant financial compensation if it leaves a post-Brexit “reset” agreement as part of negotiations with Sir Keir Starmer.
According to a draft text seen by the Financial Times, Brussels has included a termination clause under which London would have to pay a higher level of compensation for British food and drink exporters to opt out of a proposed EU-UK “veterinary agreement” to remove Brexit red tape.
EU diplomats have dubbed the condition the “Farage clause”, which they say was designed to insure the bloc against the risk of Reform UK leader Nigel Farage becoming prime minister and to fulfill his threat to reverse Starmer’s attempt to move closer to Brussels.
Reform has promised to overturn the deal and Farage told the FT on Sunday that he would not hand over any money to Brussels under any deal signed by Starmer. “I will break it,” he said.
“No parliament can bind its successor, we will not respect any clause. If Starmer signs this, it is a democratic outrage.”
“It’s standard for agreements to have contingencies for termination and they will work both ways,” a labor official said, adding that detailed negotiations with Brussels on the exact terms of the deal had not yet begun.
The official said: “Opt-out provisions are fundamental to any international trade agreement. It is frankly tiring to have these routine legal contingencies presented as democratic outrages.”
The so-called Faraj clause states that if either party withdraws, it must pay compensation that will cover the costs of setting up “the infrastructure and equipment, initial recruitment and training to establish the necessary border controls”.
An EU diplomat said it was “a security provision to provide stability and deterrence for Faraz and Co”, adding that Brussels was looking to sign an agreement that would last for the current UK parliamentary term, which ends in 2029.
“The EU wants a long-term agreement, not just until 2029, should change come at the next election,” he said.
Starmer has made a veterinary, or sanitary and phytosanitary (SPS) agreement a key element of his plans, along with an agreement to rejoin the EU and UK carbon pricing schemes, as well as to improve trade arrangements with Brussels.
Trade and industry groups have strongly advocated for a deal that would remove almost all Brexit red tape faced by exporters of agri-food products. A study by 2024 estimates that the deal could increase UK food and drink exports by 22 percent.
With Reform well ahead of both Labor and the Conservatives in the polls, EU diplomats said Brussels was being more proactive about the risk of breaking up its planned deals with Starmer.
The EU text states that the UK will pay a fee to join the veterinary agreement, based on a proportionate share of the relevant agencies managing the bloc’s border checks on imports of plants and animals, plus an additional 4 percent of that amount as an additional “participation fee”.
The draft text, which is subject to negotiation with the British government, also requires the UK to “dynamically align (with) and simultaneously implement” any rules governing animal and plant products introduced by EU lawmakers in Brussels.
Starmer’s European relations minister Nick Thomas-Symonds has said that legislation to enable dynamic alignment should be in place by the end of this year, and the deal would be operational by mid-2027.
However, both Reform and the Conservatives have pledged to scrap such an agreement, arguing that it undermined British legal independence and betrayed a significant part of the UK’s duty to respect the outcome of the 2016 vote to leave the EU.
Speaking in London on Friday, Farage accused Starmer of “trying his best to take away our parliamentary sovereignty, to take away our rights as voters”.
Conservative leader Kemi Badenoch has pledged to overturn Starmer’s “terrible deal”, saying she could not accept any deal with Brussels that included Britain being subject to European Court of Justice rulings.
The European Commission said it is “fully committed to the implementation of the actions agreed with the United Kingdom at the summit in May 2025.”
Labor officials said it was ironic that both Reform and the Conservatives, who bill themselves as free-market parties, were promising to reinstate trade barriers if they won the next election.
