Britain quietly paid the billion pound bill it was handed by Brussels on Brexit Day during trade negotiations with the EU, the Telegraph can reveal, as hopes that a trade deal can be done continue to rise. 

The European Commission sent the Government a demand for an extra £1.09 billion on top of its Budget payments to Brussels on January 31, the very day the UK legally left the EU. 

EU diplomatic sources claim the trade deal is 90 per cent done but warn crucial breakthroughs on fishing, level playing field guarantees, and protocols around the deal’s enforcement remain elusive.  A UK-EU free trade agreement could be announced as early as Monday, if compromises are made.

Tory backbenchers had called for the payment to be made conditional on the successful conclusion of trade negotiations, but the bill was quietly paid in full in the summer after talks had begun in March.

“Why has the Government surrendered an important bargaining chip?,” Nigel Farage, the Brexit Party leader said, and “weakness never works with the EU". 

“We have weakened our negotiating position. We should have said the cheque was in the post,” said Andrew Bridgen, the Tory MP for North West Leicestershire.

“Throughout Brexit, the EU has taken every advantage of playing the cad and we accept every disadvantage of playing the gentleman.”

“The amount of €1.3 billion has been made available on time by the UK, as per the rules on the first working day of June 2020,” an EU official said. 

As Brexiteers celebrated the UK leaving the EU on January 31, the UK's embassy to the EU received a bill for a billion pounds from Brussels, which was subsequently paid

Credit: Leon Neal /Getty Images Europe 

The European Commission said the Brexit Day date of the demand, which means the UK paid £10 billion rather than the expected £9 billion in its penultimate Budget contribution, was “coincidence”.

Brussels recalculates the contributions member states make to the EU Budget every year. EU officials said Britain owed an extra £1.09 billion pounds on top of the 2019-2020 Budget payment of £9 billion due to an increase in the UK’s gross national income and VAT contributions. 

Britain committed to paying its EU Budget contributions until the end of 2020, the final year of the seven-year budget cycle, at the start of the Brexit process in 2017.

Britain has already agreed to pay a £39 billion financial settlement as part of the Withdrawal Agreement, whether or not there is a trade deal. 

UK sources claimed that Britain will receive back about half of the billion pounds, once the British rebate, which was famously secured by Margaret Thatcher, is applied to its payments. 

When details of the Brexit Day bill were first exclusively reported by The Telegraph, a Government spokesman said it proved Britain was right to leave the EU.

“The fact we can be invoiced for a vast sum such as this is one of the reasons why the public voted to leave the EU and take back control of the UK’s money,” a spokesman said.

EU leaders are holding a video conference summit tonight on coronavirus but they could also discuss Brexit. 

A number of member states are understood to be planning to demand the European Commission publish its emergency ‘no deal’ Brexit plans because there are less than six weeks to go until the end of the year. 

Michel Barnier is (seen below speaking in late October) set to brief EU ambassadors in Brussels on progress on the trade negotiations on Friday. The EU’s chief negotiator told Ursula von der Leyen, the president of the European Commission, the talks were in their "final push" on Wednesday.

Alexander de Croo, Belgium’s PM said Brexit talks were in "injury time" and an agreement had to come in "coming days".

Some member states are understood to be leaning on Mr Barnier, who is 69, to not to do a deal just for the sake of his legacy and be prepared to walk away if the terms are not right. 

If a deal can be done by Monday, it will mean the European Parliament has enough time to ratify the agreement before the end of the year. Otherwise it would have to accelerate its procedures. 

A senior EU official warned that if the deal is not agreed by Monday, there will not be enough time to translate the agreement into the EU’s 24 official languages for ratification.

Are the UK and EU likely to sign a trade deal in 2020?

A few more weeks could be bought if the decision was made to forego translation and just vote on the deal in English, the official said. Diplomats suggested that could be resisted by France. 

The UK leaves the transition period at the end of the year and unless a deal is agreed and ratified by then will trade on no deal WTO terms with the EU. 

Downing Street said talks with Canada on securing a transitional trade agreement to replace the EU-Canada trade deal are at an "advanced stage" and "progressing well".

The Prime Minister’s official spokesman said: "We are committed to securing a continuity trade deal with Canada before the end of the transition period."

The rollover agreement maintains the status quo but is not a fully fledged free trade agreement.