Realist, not conformist analysis of the latest financial, business and political news

To Remind Ourselves – There Is No Brexit Divorce Bill

It’s a standard part of the Remoaner rhetorical strategy to tell us all that there’s some vast bill to be paid for leaving the European Union. This is not so, so much not so that the claim is nonsense. There is indeed some money that we’re going to have to pay on the way out the door. But we’re going to have to pay it whether or not we pass through that portal. Thus we cannot say the bill is the result nor even the consequence of leaving:

The Commons Public Accounts Committee said there was a “risk” the final settlement could far exceed the Treasury’s “narrow” estimate of £35 billion to £39 billion.

The Committee said the official figure failed to to take account of at least £10 billion in costs which the Government will have to pay to Brussels as part of the overall settlement, including nearly £3 billion worth of contributions to the European Development Fund.

And they said the UK could be making payments for the EU until “at least 2064” – almost half a century after Britain voted to leave the bloc in June 2016.

It’s possible that everything there is true. That we will indeed have to cough up those sums. It’s still not a divorce bill, is it?

Labour MP Meg Hillier, chair of the Committee, said: “The Government’s narrow estimate of the so-called divorce bill…omits at least £10 billion of anticipated costs associated with EU withdrawal and remains subject to many uncertainties.

“The UK’s contribution to the EU’s outstanding commitments and liabilities after 2020 is unknown. The estimate also excludes costs that may arise from parts of the withdrawal agreement still to be negotiated.”

The secret is in that “outstanding commitments” as we’ve said before:

The correct arrangement being that we’ve been a member of a club for some decades now. We have a certain intertwining of finances to pay for certain things, some scientific cooperation, the cash stuffed into the maws of farmers and so on. There are budgets, a cycle for deciding upon them. We’re leaving before the end of that current cycle and we have previously promised that we’ll pay up to the end of that planned period. Sure, we owe some money simply because we’ve previously said we’ll pay it.

We’re civilised people, we don’t welsh on our debts, that’s that then. There is, other than just not annoying the foreigners, no connection at all between this discharge of our promises and whatever a future trade deal is. Even the European Union itself has made this point – the bill is the bill whatever subsequently happens.

And there’s more to it than that as well. Whatever amount we pay now is the end of it. We’ll have paid all that we owe and don’t have to send more. But if we stay in then we’ll be, each and every year, signing up to more of these payments, won’t we? To say the same thing another way, this divorce bill isn’t that, it’s the cost of staying in. Because if we do stay in then we’ll have to pay for all of these things next year, and in 2021, and in 2027 and so on.

Brexit divorce bill could be £10bn more than estimated, MPs warn

That is, we’re not being told that leaving will cost us £10 billon more. We’re being told that having been in was £10 billion more than they told us. Which is rather an argument for Leave, isn’t it? The club was, presumably will be, even more expensive than we all thought. Let’s go then, eh?

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5 years ago

People keep forgetting – or more likely concealing – that we’ve got prior art for this. Didn’t it take 20 years or so to sort out Ireland’s post-UKExit finances?

John Galt
5 years ago
Reply to  jgh

It’s arguable that we never did sort out Ireland’s post-UKExit finances, since the value of the Irish Punt was effectively tied to the British Pound until they swapped the financial tyranny of the English for the financial tyranny of the ERM (so German tyranny I guess you would call that…sounds a bit familiar…although I can’t think why)

5 years ago

Doesn’t also depend on how they behave regarding the asset side of the equation, the spat over kicking U.K. out of Galileo for example, if they aren’t going to honour the commitments we have already made then seems stupid to continue making them even as part of a separation

5 years ago


And Remainers seem to forget that this ‘divorce bill’ is not in fact agreed

There is a proposal, but subject to agreement in all other areas of the Brexit arrangements

Given that the EU is dragging its feet on this, and our government is proving to be singularly inept nothing is decided

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