Would an extension to Brexit cost £1 billion a month?
3 September 2019
What was claimed
An extension to Brexit would cost the UK £1 billion a month
This is only compared to a no deal exit in which the UK refuses to pay the “divorce bill”, and it doesn’t include payments back from the EU to the UK. If we leave with a deal, any extension up to the end of 2020 will not cost us extra, as the agreed financial settlement already includes these payments.
“If you look at the Bill that Hilary Benn and the Jeremy Corbyn-led opposition have brought forward… It would create paralysing uncertainty, it’s craftily designed not just for one extension but to try and allow serial extensions, it would immediately require the UK to accept any EU conditions however punitive, however harsh, and regardless of those conditions the price tag for the taxpayer would be one billion pounds each month.”
This morning, Foreign Secretary Dominic Raab claimed that the Bill from Hilary Benn MP and others, intended to rule out a no deal Brexit unless parliament consents, would cost British taxpayers £1 billion a month (we assume Mr Raab misspoke when he said £1 billion “a day” in his Radio 5 Live interview, as that would be very wrong).
It’s also been reported that the same £1 billion a month claim was made by a Number 10 spokesperson, attributing it to the UK having to pay additional EU budget contributions if our exit from the EU is delayed.
This is potentially misleading, as it’s based on comparing the cost of any extension specifically to a no deal scenario in which the UK did not pay any of the “divorce bill” (the financial settlement previously agreed with the EU). But the government’s stated intent, repeated by Mr. Raab in the same interviews, is still to leave with a deal.
Most studies predict that the economic effects of leaving the EU will exceed the benefits of not having to pay the EU membership fee.
As such, any payments into the EU budget following an extension in this period would reduce the final “divorce bill” paid upon leaving the EU by the same amount. Leaving with a deal in January 2020 wouldn’t cost more in EU budget contributions than leaving with a deal in October 2019 would. This has already happened once: the original settlement was around £39 billion, but this is now down to £33 billion, largely as a result of extending Brexit from March to October this year.
The government could of course plan to try and renegotiate this financial settlement before October 31, but we aren’t aware of any indication so far that they hope to do this. In his Radio 4 interview, Mr. Raab said that the government had a “targeted ask” in negotiations, which was removing the Irish backstop.
£1 billion a month is a ballpark figure for our contributions to the EU budget, but it needs context
If Mr. Raab is comparing the cost of any extension to a no deal exit at the end of October, then his figure of £1 billion for monthly EU contributions is in the right ballpark. However, as BBC Reality Check has pointed out, this doesn’t factor in payments received from the EU, which would reduce the amount by about a quarter.
It’s also not entirely clear that leaving with no deal would mean we could avoid paying the “divorce bill”, something which Boris Johnson has said severaltimes would be his plan in a no deal scenario. When we looked at this question earlier this year, we found that under international law it’s not clearly set out that the UK has to pay anything once it has left the EU. However, the EU would be within its rights to take the case to the International Court of Justice on the grounds of the UK’s repeated commitments to pay, and the outcome of such a case would be hard to predict.
It’s not necessarily wrong to compare the potential cost of an extension to a no deal exit - but it’s potentially misleading to do so given that in the same interview Mr Raab restated that the government’s plan is to leave with a deal (“The prime minister’s been very clear, we want a deal” he said on Radio 4). And if you were making such a comparison, you should factor in the fact that no deal exit will itself have costs.
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