What exactly is the divorce bill paying for? And why are we paying it?
Experts at UK in a Changing Europe told us that the UK is paying this to ensure it has cleared its liabilities with the EU.
During its time as a member of the EU, the UK has made various commitments for future spending and contributed to the EU budget. The EU distributes money from this budget to projects across the EU, including some back in the UK. The budget is set out in blocks in advance, the most recent one runs from 2014 to 2020.
Some of the UK’s other commitments also stretch over long time periods: for example contributing towards pensions of UK citizens working in EU institutions, or long-term infrastructure investments through the European Investment Bank.
The “divorce bill” settles the outstanding commitments and obligations that the UK has incurred while an EU member.
It’s made up of three key elements:
- The UK’s contribution to EU annual budgets up to 2020;
- Payment of outstanding commitments (EU spending programmes we’ve said we’ll contribute to that haven’t happened yet); and
- Financing liabilities (like our share of pensions) accrued up to the end of 2020.
The government has committed to the items it will cover, not to specific amounts—which may change depending on the exchange rate (payments are in euros) and how big our economy is. Some of the liabilities may not materialise.
The latest estimate is that the bill will come to around £39 billion, to be paid between 2019 and 2064. £16 billion will go towards annual EU budget payments, £20 billion will go towards spending the UK has committed to within the EU but which hasn’t yet been spent, and just under £3 billion will go towards other liabilities (for example pensions).
The UK is also getting some money back from the EU—for example, money paid into the European Investment Bank.
We’ll be paying some of the divorce bill until 2064—but most of the bill will be paid off by 2021, according to estimates from the Office for Budget Responsibility. All our payments from 2029 onwards will be for meeting the cost of pensions.
The withdrawal agreement negotiated by the UK and EU (but not yet passed by the UK parliament) committed to paying a divorce bill in principle, but the government has also said if the UK leaves the EU with no deal on 29 March then its position on the subject could change.
This article is part of our Ask Full Fact series on Brexit, answering your questions about Brexit and the latest negotiations between the UK and the EU.
Update 19 December 2018
We updated this article with new content provided by UK in a Changing Europe.