UPDATE 1-EU eyes cash demands as Brexit talks turn sour

Britain will face EU demands for billions of euros in cash if it fails to strike a Brexit deal, Brussels officials and diplomats said on Monday after talks with London stalled 18 days before it is due to leave the bloc. Prime Minister Theresa May agreed a withdrawal treaty last year under which Britain would pay the European Union close to 50 billion euros over the coming years to meet commitments made while a member. But the British parliament has rejected the deal and the treaty will be void if nothing changes by March 29.

In the event of a no-deal exit, likely to cause economic disruption, the EU would insist on Britain committing to settle those bills - a significant part of the EU budget - before any resumption of talks on how to manage future trading relations. "Imagine all the bad blood and acrimony should we end up with a no-deal after two years of negotiations," an envoy who follows Brexit for one EU member state told Reuters.

"Yes, we would need to engage with them again. But not right away. And not before they show us the money." With May planning to put the package to a second vote in parliament on Tuesday, her negotiators failed to secure concessions in Brussels at the weekend.

EU officials and national diplomats told Reuters they were growing pessimistic and looking at how a collapse of talks might play out. An assumption in Brussels that May would ask for, and get, a delay to the deadline of a few weeks is in question: "We really want to be over with it now," one official said. "It's not going anywhere so even an extension is unlikely to break the impasse.

"There's not much patience or goodwill left on our side." Even if there is a disorderly departure, both sides acknowledge that they will have to return to the table to negotiate a long-term free trade agreement and arrangements to avoid a "hard" customs border on land between the EU and the British province of Northern Ireland, the issue on which May's divorce deal has stalled.

But, EU diplomats and officials said, Brussels would put a price on those talks. "First, they would have to agree to pay what they are due," an EU official said. Diplomats said negotiators have briefed the 27 other governments that this would be a condition for talks.

The other conditions would be to safeguard citizens' rights and find solutions for the Irish border, the sources said. Another EU diplomat painted a picture of a Brexit snake eating its own tail in eternity.

"We have been very firm on these three issues because they are essential for us. And that doesn't change after a no-deal Brexit," the person said on condition of anonymity. "So these would be back on the table as very clear conditions for starting trade talks, only the UK's position would be weakened again. It will be about what is your threshold for pain?" (Additional reporting by Jan Strupczewski and Alastair Macdonald, Writing by Alastair Macdonald, Editing by Janet Lawrence)