• David Davis says Britain will refuse to pay its Brexit divorce bill unless Brussels backs down on demands to keep Northern Ireland aligned with EU rules after Brexit.
  • He told MPs Britain would not finalise any payments to the EU until “all of the issues” concerning Britain have been resolved.
  • Tensions between UK and EU negotiators have escalated rapidly.
  • The prime minister will outline her rejection of the proposals in a meeting with Donald Tusk, president of the European Council, at Downing Street today.

LONDON – Britain will refuse to pay its £39 billion Brexit divorce bill unless Brussels backs down on legal demands that would keep Northern Ireland aligned with European Union rules, David Davis has warned.

The Brexit secretary wrote to Tory MPs on Wednesday evening in a letter seen by the Times. He said Britain would not finalise any payments to the EU until “all of the issues” concerning Britain have been resolved.

Davis also said the government would not sign the EU proposals to give the European Court of Justice the power to rule over UK-EU disputes after Brexit, and rejected “punitive sanctions” proposed in the event that Britain broke the terms of its transition deal.

The letter came hours after the EU Commission published a draft Withdrawal Bill setting out the legal terms of Britain’s exit from the EU. The document said Northern Ireland should remain in a customs union with the EU if the UK cannot find a different solution which avoids a hard border between north and south Ireland.

The proposal caused outrage and surprise among Conservatives and Northern Ireland's Democratic Unionist Party (DUP) because it would mean a new border emerged between Northern Ireland and the rest of the UK when it leaves the customs union.

EU figures pointed to the fact the UK had already agreed to similar provisions in its a draft agreement reached in December between UK and EU negotiators, when the UK also settled on the size of its divorce bill.

The news comes as tensions between UK and EU negotiators escalated rapidly. The prime minister told the House of Commons on Wednesday that the draft bill would, if implemented, "undermine the UK common market and threaten the constitutional integrity of the UK," adding that "no UK prime minster could ever agree to it."

She said she will outline her rejection of the proposals in a meeting with Donald Tusk, president of the European Council, at Downing Street today.

Tusk last week described the UK's approach to the next round of negotiations at "pure illusion."