Article 50 and EU budget payments

9 December 2016
What was claimed

The UK will pay a net £20 billion into the EU budget while it negotiates the terms of exit under Article 50.

Our verdict

We can’t replicate the exact figure, but it’s plausible. The UK is set to pay over £9 billion per annum net into the EU budget in the next few years.

“My concern is that we trigger Article 50 in March—that’s what the House of Commons agreed to do [on Wednesday]—and if we spend two years negotiating this that’ll be another net £20 billion we’ve paid away.”

Nigel Farage, 8 December 2016

It’s correct that the government will pay tens of billions into the EU budget over the next few years. What’s less clear is whether this could legally be avoided.

Total payments to the EU are fixed over a seven-year period, with annual budgets set in order to meet this overall limit. The 2014-2020 period will see the EU spend over a trillion euro.

The UK is forecast to pay in £9.7 billion in the current financial year 2016/17, £8.4 billion in 2017/18 and £9.3 billion in 2018/19. This is the net contribution—taking off the discount we get because of the UK rebate and the money that comes back to the Treasury in EU funding. So £20 billion over two or three years following the referendum in June 2016 is plausible, depending on how exactly you do the sums.

But it’s not obvious that there’s an easy alternative. Quitting the EU instantly without using the Article 50 process at all would be illegal. The Article 50 process envisages a two-year time limit before a country leaves, during which there will be negotiations over the terms of divorce. If Article 50 is to be used, continuing to pay into the EU budget—and receiving payments from it—during that period is inevitable.

On top of ongoing payments, EU officials are reportedly keen for the UK to pay a lump sum covering its budget liabilities beyond 2019—up to €40 billion, according to the Financial Times. The exact amount, if any, will be settled during negotiations.

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