Theresa May is to be told the EU will take a year to draft a new mandate for its chief negotiator, Michel Barnier, effectively killing the Brexit negotiations, if she insists on discussing a future trade relationship at the same time as the UK's divorce bill.
In a sign of growing impatience with the shambolic state of the British side of the talks, senior EU sources said that if London insisted on talking about a free trade deal before the issues of its divorce bill, citizens rights and the border in Ireland were sufficiently resolved, it would be met with a blunt response.
“If they don’t accept the phased negotiations then we will take a year to draw up a new set of negotiating guidelines for Barnier,” one senior EU diplomat said, adding that the EU could not understand Britain’s continued claim that it would be able to discuss trade and the divorce terms in parallel.
The EU’s 27 leaders formally agreed to give Barnier a narrow set of tasks at a summit in April and they have no intention of rethinking the so-called phased approach when they meet May at a European summit on June 22-23rd .
Formal Brexit talks are due to begin on June 19th, the same day as the Queen’s speech, at which point it will be known whether Ms May has secured the support of a majority of MPs for her policy agenda.
The Department for Exiting the European Union sent a note to the European commission on Friday evening to signal that the government was operational and pre-negotiation talks about logistics should begin this week as planned.
Olly Robbins, Ms May's EU adviser, told his European counterparts: "The prime minister has directed that the procedures for preparing the negotiations for the formal withdrawal from the European Union should start as soon as possible."
There is some scepticism in Brussels, however, about the ability of Ms May's minority administration to make effective decisions.
The threat to take a year out of the already dwindling window for negotiations under article 50 of the Lisbon treaty illustrates the intense frustration felt in Brussels.
The European commission president, Jean-Claude Juncker, had privately urged May to hold a general election on several occasions, hoping she would be able to secure a big enough majority to free herself from the whim of the hardline Brexiters in the cabinet, only to be left dismayed by the result.
An EU source disclosed that Brussels had also been secretly briefing Downing Street on the 27 member states’ negotiating position for months, well ahead of it being public, to allow the government to shape its response.
“They have had everything, sometimes before senior people here have seen the positions”, the source said. “May has known about the sequencing of talks since last September. None of this has been a surprise to her.”
Roberto Gualtieri, an Italian Socialist who leads his group on Brexit, said: "The previous government did not show a full awareness of what the negotiation is going to be," Gualtieri said. "I hope the interlocutor will be fully aware."
Elmar Brok, a senior MEP in Germany's ruling centre-right party, said the EU would be open-minded if Britain reneged on its pledge to come out of the single market and the customs union following the election result. "We are open to everything from internal market and customs union to a free trade agreement. It depends on the flexibility of the British government. We want to keep the damage of Brexit low," he said.
The defence secretary, Sir Michael Fallon, said on Sunday that the UK government's position had not changed. EU diplomats, however, are reportedly expecting Ms May to make a "generous offer" on guaranteeing the rights of European citizens living in the UK as a goodwill measure to start the talks.
The collapse of Ms May's authority has made her a figure of open mockery in Brussels. Martin Selmayr, Mr Juncker's powerful chief of staff, suggested Ms May had made her aides the fall guys for her own failures. "Bauernopfer," he tweeted in response to news about the forced resignation of Nick Timothy and Fiona Hill, a chess term that has taken on the meaning of firing a subordinate to protect the boss.