UK's Hammond says economy should be priority in Brexit talks

The announcement of the formal start of discussions was agreed on Thursday between Britain's Brexit minister David Davis and the European Commission's chief Brexit negotiator Michel Barnier.

"We've set out the broad principles from where we will start the negotiation and we will negotiate in good faith, but it is a negotiation and we recognize there will be an exchange of views and we will take that forward in a spirit of genuine cooperation", Chancellor of the Exchequer Philip Hammond told reporters in Luxembourg on Friday.

Brexit talks will begin Monday.

The EU's chief negotiator, Michel Barnier, has long argued that the initial talks should center on brokering deals on citizens' rights, money owed by the United Kingdom and the border between Northern Ireland and the Republic of Ireland.

The Conservatives will enter the negotiations significantly weaker than they had expected, following last week's general election in which the party lost its absolute majority in the House of Commons.

The fact Davis agreed to an agenda on Monday that will see him and British officials spend some seven hours in the European Union executive's headquarters discussing who will talk to whom when and about what has come as a relief to some European Union negotiators. She also said: "I am equally clear that no deal for Britain is better than a bad deal for Britain".

Among topics that need to be agreed upon is the status of United Kingdom citizens living and working in the EU, as well as that of European nationals doing the same in Britain.

German Finance Minister Wolfgang Schaeuble said in a Bloomberg Television interview this week that as soon as "the principles" of Brexit are agreed, talks can move on in parallel to "the details of the regulation, and what will be the further relations between the United Kingdom, after Brexit, and the single market and the European Union, and so on".

"It's absolutely certain that no one will engage with her", a second European Union diplomat told Reuters. "However, discussing about the amount of money, here there will be flexibility", he added.

Brussels has previously warned the UK Government it will only enter talks on a potential future trade deal with Britain once "significant progress" is made on divorce matters.

Barnier speaks of a willingness to look at various options but EU officials also stress that greater access to EU markets will mean accepting greater costs, closer to EU membership, and question whether Britain can find a political consensus on that.

He added: "As the European Union has itself said, "nothing is agreed, until everything is agreed".

Norway is in the single market, in return for accepting free immigration from the EU, EU courts and budget payments.

For Brussels, a concern with starting talks on such models would be that Brexit supporters might end up blocking them, raising the risk of time running out to get any deal: "Would you".

"The big clash that we feared isn't there", said one senior official involved. "It all becomes very uncertain".

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