Brexit Divorce Bill: What does the UK owe Brussels?

Britain’s Brexit Divorce Bill has been at the heart of the EU exit debate for more than three years.

Along with citizens’ rights and the Irish border, this was one of the main points of contention between Brussels and the UK government as the two sides sought to strike a withdrawal deal.

After much wrangling, a total of £ 39bn was finally agreed to cover unpaid budgetary contributions and payments to EU institutions during the two-year ‘transition’ period.

Yet after rejecting Theresa May’s withdrawal deal, her Downing Street successor Boris Johnson put Britain on a collision course with Brussels by warning that he would cut more than £ 30bn. the EU’s No-Deal Brexit Divorce Bill. .

So what exactly does the UK owe Brussels? And why haven’t his past payments covered that already?

Why does the UK have to pay anything to the EU?

Britain’s dues over the past four decades have been used to fund the EU and its projects, including some future plans to which the UK has already pledged to contribute. There are also some other liabilities incurred during UK membership that will need to be funded.

The Institute for Government and the Financial Time define four areas that make up the gross invoice:

  • Payment for projects that have been initiated but not yet fully paid
  • Pensions for EU officials and politicians
  • Unpaid loan payments and money to cover potential liability for unpaid loan payments
  • The costs of the withdrawal itself

In this context, the UK would be entitled to any outstanding budget repayments, payments for EU-funded projects in that country, possible loan repayments and contingencies and, potentially, a reflection its share of assets such as buildings.

What happens if there is no agreement?

Brexiteers have long argued that leaving the EU without a deal would mean that part or all of the £ 39bn divorce bill slated for Brussels would remain in the Treasury books.

While former Chancellor Philip Hammond had previously said the UK would still be forced to pay the majority of the £ 39billion bill without a trade deal, his successors in government have taken a decidedly more confrontational approach.

During the Tory leadership campaign, Johnson suggested that the entire £ 39 billion would be kept in the hope of using it as leverage to win better future trade relations with the EU27, saying: “Silver is an excellent solvent and an excellent lubricant”.

Corn The Guardian says “Downing Street seems to have admitted that legal obligations for past liabilities may mean that up to a quarter of it can still be paid.”

In August, the Prime Minister told European Council President Donald Tusk that the UK would hand over less than £ 10 billion if the EU fails to secure a deal removing Northern Ireland’s safety net .

A senior government source said: ‘The PM has always said it was a huge mistake to accept the Divorce Bill before any Brexit deal is finalized. If there is no deal, Brussels will have to organize a boost – they will have to plug a huge hole in our contribution and they will need billions to keep Ireland afloat.

This contrasts with an EU official speaking to the Financial Time who said the money would be due even in the event of a no-deal Brexit, as it was tied to financial commitments Britain made.

“This is all about UK obligations. For us, it is due whatever the circumstances. It will be calculated when the UK leaves, ”they added.

Is the UK legally obliged to pay?

A House of Lords Committee concluded that once the UK leaves the bloc, all EU-related treaties no longer apply and therefore there is no legal mechanism to force the country to pay.

However, legal opinions on this subject are divided.

According to The temperatureJohnson ordered government lawyers to calculate the amount of £ 39 billion the UK is legally required to pay, and they concluded that figure could be as low as £ 7 billion.

Complete fact, meanwhile, said: “It is not clear whether the UK would be forced to pay anything if we left without a deal, but the EU could take the case to the International Court of Justice in because of the UK’s repeated commitments to pay. “

There is also an argument that Article 70 of the Vienna Convention on the Law of Treaties will still apply and force the UK to pay what is deemed to be due under existing Europe Agreements.

Beyond legal issues, there are other issues related to the non-payment of the invoice, says Channel 4the FactCheck website.

“If we don’t pay our debts […] there would be political consequences when we seek to negotiate trade agreements with new partners, ”Emily Reid, professor of international economic law at the University of Southampton, told the site.

“In my opinion, we would be legally and morally wrong if we did, which would have repercussions on our future relations with potential partner states,” she added.

EU officials have even suggested that the EU will refuse to negotiate a trade deal with the UK if the government backs off the Brexit bill.

Sources in Brussels have warned that future trade talks will be stalled until the UK agrees to a settlement, with one official calling the financial settlement a “totemic” problem for EU member states.

“The message will be ‘honor your debts, or we’re not even going to start talking about a trade deal,'” the source said. The Guardian said this reflected a “widely held view among diplomats.”

Echoing these deep-seated sentiments, Jean-Claude Piris, former head of the legal department of the Council of the EU, tweeted: “If the UK refuses to pay its debts to the EU, then the EU does will not agree to negotiate a trade agreement with the UK. . “

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