Theresa May today signalled she is ready to pay billions of pounds more in a Brexit divorce bill to secure a December deal to begin trade talks.
In a choreographed finish to the EU summit, the other 27 leaders took less than two minutes to reach a decision to start “preparations” for moving negotiations onto trade.
Sources confirmed to the Standard that at a dinner yesterday Mrs May told them that her Florence speech last month, offering at least £18 billion, was “not the final word”.
Cabinet ministers think that the final bill could be another £20 billion higher.
An agreement before Christmas would delight the City, which today warned firms will have no choice but to consider moving jobs abroad if the stalemate were allowed to drift on to next year.
But it will be fiercely resisted by Tory Eurosceptics who repeated calls for a “hard Brexit” on World Trade Organisation terms.
The Pound rose half a percentage point against the euro to 1.1159 during the morning as the fear of a hard Brexit eased.
At a final press conference, Mrs May was asked three times if she was offering more money and gave no denial. Sticking to her Florence speech, she said: “We will honour the commitments that we made during our membership.
“Now there has to be detailed work on those commitments .... and we will continue going through them line by line and the British taxpayers wouldn’t expect its government to do anything else.”
Moments before she stood up, European Council president Donald Tusk tweeted: “Brexit conclusions adopted. Leaders green-light internal EU27 preparations for 2nd phase.”
Brussels officials think a cash offer will instantly unlock agreements on EU citizens’ rights and push the Northern Ireland border issue into the phase two talks.
Mrs May repeatedly said she felt “optimism” that negotiations were back on track, while conceding there was “some way to go”.
She said: “As I understand it, following the discussion that has taken place this morning, we will see the EU considering their response to the Florence speech in terms of the sort of vision that they have for the partnership that we can have for the future.”
Pressed on reports that the Cabinet was planning an “upbeat” assessment of a no-deal scenario, the Prime Minister said: “I have been clear that we have been working for a good deal and I am optimistic about getting that.
"But, as I have said, and others have said consistently, it would be irresponsible for the British Government not to look across at the changes that will be necessary regardless of the eventuality.
“Work is being done across Government departments for all eventualities, and that includes for getting the good deal, the positive deal, that I am confident that we can achieve, and we have seen from European leaders here, believe is achievable as well.”
Mrs May repeated that the two sides were within “touching distance” on a deal regarding citizens’ rights.
Her words helped settle nerves in the City after the boss of Goldman Sachs tweeted about how much he was enjoying the German city of Frankfurt — fuelling doubt over the banking giant’s commitment to London.
Lloyd Blankfein said: “Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there.” Kerstin Mathias, head of policy at TheCityUK, said all City firms had contingency plans to move jobs out of London if Brexit stopped them from serving clients in Europe. She said the “urgent priority” for bosses such as Mr Blankfein was to get “really rapid agreement of transitional arrangements” from the Brexit talks.
“The most important thing for the financial services community is their continued ability to service their customers and clients,” she told BBC Radio 4’s Today programme. “In the absence of clarity ... they will have to start implementing those plans soon as of course that comes at a cost.”
The mood among the 27 improved after the dinner late last night speech, with German chancellor Angela Merkel saying the ball was in “both our courts”. But EU leaders lined up this morning to warn that “rhetoric” was not enough and Mrs May must give more “clarity” on exactly how much she is ready to pay. The Prime Minister made her most personal appeal yet to leaders over a dessert of fresh pineapple slices, when she asked them to give her a deal “we can defend to our people”. She was heard in silence as she spoke for about 15 minutes and tried to convince her counterparts that the Florence speech should be rewarded with movement on both sides.
However, EU leaders arriving for the second day of the summit this morning said Mrs May had to go further. Lithuanian president Dalia Grybauskaite said Britain had given “only rhetoric in the media; nice positioning, nice stance, but no real negotiations”. Irish premier Leo Varadkar said the “difficulty” was the lack of detail in Mrs May’s address. “We need to see sentiment and language backed up with more detail,” he said.
Speaking at her own press conference this afternoon, German chancellor Angela Merkel ruled out immediate talks on a transition period, saying it is "not the decisive issue right now”.
But she added that a two-year transition phase was "an interesting idea”. “Mention has been made of the two-year transition and we will come back to it at a given point in time,” Mrs Merkel told reporters.
Maltese prime minister Joseph Muscat said Mrs May had delivered “her best performance yet” at the dinner but that her intervention had not “really changed anything”. European Commission president Jean-Claude Juncker declared: “I don’t think there will be a miracle.”