UK and Brussels clash over £ 40bn Brexit divorce bill

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Brussels and London are grappling with a dispute over the size of Britain’s Brexit bill, after the EU suggested Britain would be forced to pay € 47.5 billion (£ 40.8 billion ) as part of its post-Brexit agreements.

But the UK Treasury has insisted the Brexit divorce settlement remains in its previous central range of £ 35bn to £ 39bn. An updated estimate is due to be published next week in an EU finances statement.

The highest sum was first reported in the annual accounts of the EU for 2020, which were published by the European Commission at the end of June.

The obligations relate to past commitments made when the UK was an EU member state and during the post-Brexit transition period, which ended at the end of December.

A Brexit divorce deal was one of the first key elements of the London-Brussels talks after the 2016 exit vote – and one of the most difficult to resolve.

The methodology was agreed upon by both parties in the Withdrawal Agreement, but any expected increase in the bill would anger conservative Eurosceptics.

The sum in the EU accounts, which will be paid over a period of several years, exceeds previous UK estimates. The figure of 47.5 billion euros was reported earlier by Irish broadcaster RTÉ.

A House of Commons library document on the Brexit Divorce Bill said there was “no final cost for the settlement,” but according to the Office for Budget Responsibility, the body UK fiscal surveillance, the net cost to the UK could be £ 34 billion.

The House of Commons document, produced in December 2020, showed UK payments to the EU budget increased from around £ 9bn per year in 2020 to around £ 1bn in 2025 before gradually decreasing.

As part of the final deal, the UK contributed to the EU budget as if it were a member state until the end of the Brexit transition period on January 1, 2021. The UK received funding from EU programs during this period.

The overall liability relates in part to the UK’s share of EU spending commitments outstanding at the end of December, for which payments will be made in subsequent years. It also reflects the UK share of obligations related to the EU’s role as employer – for example, pensions and health insurance for retirees.

Among the offsetting factors is the slice of competition fines imposed on the UK in cases which had been decided before the end of last year.

The EU plans to provide the UK with semi-annual reports on actual amounts due, with payments to follow on a monthly basis.

The Treasury said the EU document was an accounting estimate rather than accurately reflecting the true figure of what would be paid.

He added: “Under the Withdrawal Agreement, the UK only pays our net liabilities when invoiced by the EU. For the majority of our debts, the bill is based on what is actually paid by the EU, rather than an estimate. “

UK companies and other bodies will continue to receive funding from the EU budget for projects launched before the end of the transition period. The Treasury said it would explain next week “how we know we are paying the right amount under the Withdrawal Agreement”.

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