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

Why Is Britain Leaving Brexit Money With The EU Instead Of Taking It?

This looks like a remarkably bad bit of negotiation here. It appears that we’re going to just make a gift to the European Union of some billions of pounds. Not even as part of some clever negotiation, nor in return for anything, but just because we’ve not bothered to ask for it. This is not, to put it mildly, sensible.

The underlying question goes to the heart of that whole divorce bill thing. For of course there isn’t a divorce bill. That £39 billion or whatever is what we’ve already agreed to pay in. We’ve agreed to pay it, we’re going to pay it. And we’d pay it if we stayed in, we’ll pay it if we come out. It’s not a payment contingent upon the decision to divorce therefore it’s not a divorce payment.

If you want to relate it to an actual divorce it’s like the electricity bill for what’s already been consumed. That’s going to be paid whether the couple stay together or not. So, it’s got nothing at all to do with the divorce.

However, that’s not true of the capital assets – just as in a divorce. Who gets the house matters. And we don’t go around valuing the house at what it was bought for either, we value it at current market. Exactly what isn’t being done here:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Britain has failed to push the EU for its share of profits from the European Investment Bank, a House of Lords committee has claimed, effectively giving up a €7.6bn (£6.6bn) prize. The EIB is owned by EU nations, which each contribute money to enable the fund to back infrastructure projects across the union. The UK will get back what it put in when it first financed the EIB, amounting to 16.1pc of the total pot, or almost €3.5bn. But the EIB has operated for decades and made profits on its loans. The total profits that have been retained in the fund amount to €47.3bn, giving the UK a stake of around €7.6bn. [/perfectpullquote]

We should indeed get our share of the capital assets back. Just as we should our cut of the parliament buildings, the embassies and all the rest that has been built with our money. Sure, only partially with our money but then we’re only asking for a part of that value back.

That the government isn’t demanding all this cash is proof that they’re not taking the situation seriously. Of course we should get our cut of the profits, the assets. And if we don’t then we shouldn’t pay those accrued bills either.

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5 years ago

Has anybody actually seen a broken-down detailed analysis of the £39bn?

To stick with the analogy above, I wouldn’t pay my electricity provider anything unless said provider delivered a clear explanation of the amount being claimed from me.

So – Mr Juncker? Mr Barnier? Mr Selmayr? Anyone?

Quentin Vole
Quentin Vole
5 years ago
Reply to  Davidsb

One small (but not insignificant) chunk is for ‘future pension rights’ of current EU employees. But there’s no pension fund here, EU pensions are paid out of current income (as are many UK civil service pensions). So when we joined back in 1973 we immediately started contributing to pension payments for eurocrats who had never been in post when we were members. And by the same token, we have no need to pay future pensions once we’ve left – if the EU decided not to create a pension fund, that’s their problem, not ours.

Jonathan Harston
Jonathan Harston
5 years ago

Taking the divorce analogy further, it’s as with I and my ex-wife both still owning our shares in our joint-owned business. I couldn’t afford to buy her out, she couldn’t afford to buy me out, and each having 50% of the income stream was a better position than liquidising it and having nothing.

Chester Draws
Chester Draws
5 years ago

Britain doesn’t need to refuse to pay. It merely needs to refuse to pay *now*.

And continue until an acceptable deal is struck. That might be decades. But that’s for the EU to decide.

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