Claims that a no deal Brexit “will cost us nothing” are incorrect

17 May 2019
What was claimed

The EU is demanding that the UK pays a £39 billion divorce bill.

Our verdict

This was jointly agreed by the UK and the EU. It covers the UK’s outstanding financial commitments and liabilities to the EU.

What was claimed

A no deal Brexit will cost us nothing.

Our verdict

Incorrect. The government has already spent money on specifically preparing for no deal. Experts say no deal may lead to a long-term reduction in economic prosperity.

This post on Facebook claims that while the Brexit “divorce bill” will cost the UK £39 billion, leaving the EU with no deal will cost us nothing. It has been shared over 6,000 times.

The cost of the divorce bill is about right, but it is misleading to say that a no deal Brexit will “cost us nothing”, as there are a number of financial costs associated with no deal. It is also possible that the UK may still have to pay some or all of the “divorce bill” in the event of no deal.

The “divorce bill” was agreed upon together by both the UK and the EU as part of the withdrawal agreement negotiations, and the latest estimates suggest it will be just under £40 billion . It covers the UK’s outstanding financial commitments and liabilities to the EU, including annual contributions to the EU budget up to 2020.

If we left with no deal, it’s uncertain how much of that we’d have to pay, if anything.

Experts at UK in a Changing Europe told us in February 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. The European Commission has said that in a no deal scenario, it would still expect the UK to “honour all commitments made during EU membership”.

But, divorce bill aside, there are other costs associated with a no deal Brexit.

We already know that the government allocated over £1.5 billion to prepare for Brexit in 2018/19. Some of this was specifically for no deal preparations, but we don’t know how much exactly.

An example of these costs are the (subsequently cancelled) ferry contracts, which the government signed in preparation for no deal, which could cost the taxpayer up to £57 million, according to earlier estimates by the National Audit Office. The government says the cost is “less” than this.

There would also be costs associated with government agencies hiring extra staff. For example, HMRC has said that they would need to hire double the current number of customs officers in the event of no deal.

Additionally a no deal Brexit could lead to disruption, with overnight changes to how our borders and trade with the EU are regulated. According to experts at UK in a Changing Europe, estimates suggest that, in the longer term, UK economic output could be reduced by up to 10% in the case of no deal.

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