UK’s Brexit bill likely to be well under €60bn, says think tank

Influential Bruegel institute sees UK needing to pay at least €25.4bn

The UK’s exit bill relates to commitments already made to EU spending programmes and other liabilities. Photograph: EPA

The UK’s exit bill relates to commitments already made to EU spending programmes and other liabilities. Photograph: EPA

 

The UK’s bill for leaving the EU will be at least €25.4 billion but is unlikely to reach the €60 billion quoted by senior EU officials, according to a new analysis from a respected European think thank.

The analysis by Bruegel shows that tough negotiations lie ahead, with the potential exit bill ranging between €25.4 billion and €65.1 billion depending on the calculation method used. An outcome towards the lower end of the range is seen as most likely.

The payment due from the UK to the EU will be a key item to be negotiated when the talks start in a couple of months. The EU wants this to be agreed first before substantive talks get under way on a new trade deal to operate after Brexit. However, Britain argues that the two issues should be negotiated together.

The sequence of the negotiations looks likely to be the first major clash, with lead EU negotiator Michel Barnier signalling that agreeing an exit deal will take the opening months of the negotiations

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German chancellor Angela Merkel rowed in behind this approach on Wednesday, saying that “only when the relevant questions [on the UK’s rights and obligations] are clarified can we subsequently – but hopefully soon – talk about our future relationship”.

The UK’s exit bill payment relates to commitments already made to EU spending programmes and other liabilities.

Key questions

Due to the unprecedented nature of the UK’s departure, Brussels-based Bruegel outlined the key questions which the negotiators must tackle.

Among the key questions are whether Britain has a claim on the accumulated assets of the EU, as well as having liabilities to meet.A definition will also need to be placed on the period for which the UK is judged to have made commitments to support EU spending programmes. One possibility is to base the discussions on the EU’s current seven-year spending programme which runs up to 2020.

There will also be intense and complicated debate on how to calculate the UK’s share of future EU commitments and liabilities, and on its liabilities to future spending costs.

The final bill will depend on “fundamental political compromises and choices”, Bruegel says.

It takes 12 scenarios to calculate the long-run net cost, which could, it says, be comprised of a larger UK upfront payment followed by later reimbursements from the EU. Seven of the figures come in between €30 billion and €45 billion, below the widely-discussed €60 billion figure.

Bruegel says that the exit bill talks will attract significant public attention but are a lot less important than the discussions on future trade, financial services and labour mobility between the EU and UK.