The latest estimate for the size of the UK’s ‘divorce bill’ upon leaving the EU is £33 billion (€36 billion), assuming the UK departs on 31 October this year.
This is based on calculations the UK and EU have agreed, although the final value may still change.
The often-quoted figure of £39 billion is what the bill used to be when the UK and EU first agreed on the payments. Since then it’s been revised down, not least because the UK’s exit from the EU has been delayed, at least until the 31 October.
But while that delay has reduced the amount the UK has agreed to pay upon leaving, “it does not change the overall amount that the UK transfers to the EU”, according to the Office for Budget Responsibility. That’s because part of the bill was always planned to include the UK’s regular membership payments to the EU budget as if it were still a member until the end of 2020.
So while the amount the UK has agreed to pay upon leaving has reduced, it isn’t currently set to pay any less money to the EU than it would have otherwise—part of it is simply being paid while the UK remains an EU member.
The government expects to update the divorce bill figure once the UK leaves the EU.
What has been agreed?
On 11th December 2017, the Prime Minister confirmed that the UK and the EU have agreed “the scope of commitments, and methods for valuations and adjustments to those values.” The calculations are an estimate of the UK’s commitments to the EU, valued according to a set of agreed principles. The bill is made up of:
- The UK’s contribution to EU annual budgets up to 2020;
- Payment of outstanding commitments; and
- Financing liabilities up to the end of 2020.
In November 2018 UK government and EU negotiators reached agreement over the UK’s withdrawal from the EU (the draft withdrawal agreement) which reaffirmed that the UK and EU have agreed that the UK will honour its commitments to the EU through a financial settlement.
The divorce bill is not binding until parliament approves the draft withdrawal agreement. That agreement has so far been rejected three times by the UK parliament.
Previous reports about the size of the agreed bill have varied a great deal
Before the £38 billion sum was provisionally agreed in December last year (then calculated as £39 billion), commentators speculated on the size of the divorce bill and made a wide range of estimates. A House of Lords report also argued that legally the UK isn’t required to pay a penny, though this was disputed by some legal experts, and the report itself acknowledges that there are “competing interpretations”.
In late November 2017, the Telegraph reported that the final payment figure would be “between €45bn and €55bn, depending on how each side calculates the output from an agreed methodology”. That would have been between around £40bn and £49bn. They said these terms were agreed at a meeting between both sides in Brussels.
Alex Barker and George Parker of the Financial Times said of the same negotiations that the UK would assume liabilities “worth up to €100bn” (£88bn). However, they said that the net figure (after deductions for payments made to the UK) could fall to less than half of that – “with the UK side pressing for an implied figure of €40-45bn” (£35-£40bn).
These reports were neither confirmed nor denied by the UK and EU sides at the time.
The Prime Minister said in a major speech in Florence in September 2017 that: “I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. The UK will honour commitments we have made during the period of our membership.”
A Sunday Times report in September 2017 also suggested the Prime Minister could approve a bill worth up to £50 billion (€54bn), while in August 2017 the Sunday Telegraph suggested £36 billion (€40bn) was considered by the UK as the sum likely to be reached through negotiations with the EU.
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