Potential €72bn EU leaving bill risks smooth Brexit

The UK’s bill for leaving the EU could be as high as €72.2bn, according to a report that highlights the risk disagreements over the final figure pose to a successful Brexit deal.

The Centre for European Reform report, by Financial Times correspondent Alex Barker, found the cost of departure could be anything between €24.5bn and €72.2bn.

“Britain’s EU exit bill is possibly the single biggest obstacle to a smooth Brexit. The European Commission calculates that the UK has €60 billion of charges to settle. Britain is confident it will face down what it considers to be spurious demands,” Barker stated.

“The issues are surmountable…But disputes over EU money are almost always highly-charged and occasionally nasty. A mismanaged negotiation of the bill could easily poison Brexit divorce talks and future UK-EU trade relations.”

According to Barker, the figure proposed by the EU will be decided by three main factors as well as a number of miscellaneous items. The sum may also be adjusted to include the UK’s budget rebate, share of EU assets and any payments due from the continent.

The largest amount relates to the increasing gap between payments made to the EU’s annual budget and commitments to a seven-year budgetary framework already agreed by the UK and the other 27 EU members. In total Barker estimates a €29.2 bill for the UK to cover the difference.

The second portion relates to investment commitments after the UK exits the EU in 2019 made up of “cohesion” funding for projects, such as motorways, in poorer countries. Barker estimates that Britain’s share could reach €17.4bn.

Irrespective of the difficulties the government will have in explaining to the public why the UK will have to continue to pay after 2019, the EU is likely to insist that because Britain has approved the current budget, which runs to 2020, it is liable.

The third part of the bill relates to EU pension liabilities, which currently stand at more than €60bn. This element is likely to be a flashpoint in negotiations, with the potential for negotiators to fall out on whether Britain should only pay for its own nationals or whether the liabilities are an EU-wide responsibility, as European officials currently insist.

Barker notes that any hostility over the final sum could have significant implications for future trade relations between the UK and the EU.

He said: “The Brexit money dispute will begin as law, and conclude as politics.”