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

It’s Not A £40 Billion Brexit Bill – It’s Actually £0

Thanks for all the fish, obviously

As I might have mentioned before the country is not facing a £40 billion Brexit bill. The actual bill for Brexit is zero.

Final bill for Brexit is £40bn, as EU demands £2bn more than expected
Cost would have been higher but Brussels owes the UK nearly £2bn for its previous share of fines imposed by the bloc

Simply nonsense.

Britain’s final bill for leaving the EU is £40.8 billion, according to accounts filed in Brussels, a greater sum than previously forecast.

Officials had estimated the final cost would be £39 billion – £1.8 billion less than the EU amount contained in the EU’s consolidated budget report for 2020.

The final bill would have been higher, almost £43 billion, but Brussels owes the UK £1.8 billion for its share of fines imposed by the bloc before the end of the Brexit transition period at the end of last year.

Ministers believed the final Brexit bill would be less than £39 billion because the numerous Brexit extensions meant that the total was decreased thanks to the UK’s contributions to the EU Budget.

The Office for Budget Responsibility said in November there was about £25 billion left to pay by 2057. About £18 billion will be paid in the first five years, the BBC has reported.

Now put away all prejudice – either way – and think for a moment.

So, if we stayed in would we have to pay these sums? Yes, we would. The entire point of these sums is that they are contractual agreements connected with our membership. For example, do we have to make the pension payments for UK peeps who work in the bureaucracy? Yes. Would we have to pay them if we stayed in? Yes.

So, they’re not a bill for leaving, are they? The bill is just the crystallisation of what we would have had to pay if we had stayed.

We also aren’t running up further necessary contributions off into the future. Nor are we paying into the more general budget any more. So Brexit leads to a reduction in our payments to Brussels, no?

Another way to put this is that the £40 billion is the cost of staying in. Because we would have had to pay that – and more – if we had stayed.

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Boganboy
Boganboy
25 days ago

Must confess I’d demand all the money extorted from the UK, plus interest, for its entire period in the EU.

I certainly wouldn’t give them a penny.

FrankH
FrankH
25 days ago

“Another way to put this is that the £40 billion is the cost of staying in. Because we would have had to pay that – and more – if we had stayed.”

More accurately, since the cost was incurred because we were in the EU, that’s the cost of being in the EU.

Leo Savantt
Leo Savantt
25 days ago

It is not much commented on that the UK’s contributions have helped fund assets and projects that the UK is not anymore an owner/beneficiary of, having left. Certainly the UK does owe an amount, perhaps roughly 40bn, but surely it is owed a far greater amount, a fact that Mrs. May ignored from the outset of negotiations.

Barks
Barks
25 days ago

Yes. However, there seems to be no accounting for the dividends which all were assured to be forthcoming from the generous contributions made by the UK to the EU over the past decades. The liabilities have been identified but the assets are yet to be accounted for.

DDavies
DDavies
25 days ago

The EU have had their cake and eaten it on this issue though. When the UK joined we didn’t get a discount for all the costs related to schemes (money wasted) started before we joined but still being billed or pensions for people retired and never to do a days work (screwing us over) for us. and now we’ve left we charged for things that never happened while we were there and may happen in the future because they were plans. i suppose this is the essence of being an EU rules based organisation – as in you make them… Read more »

Bloke in Kent
Bloke in Kent
25 days ago

I’ve never really got the whole rebate argument; from what I can fathom it’s no different to being a member of the local cricket club: I joined 20 years ago and have been paying my annual membership ever since. I pay monthly by direct debit for convenience however it is an annual commitment. During that time the club committee has decided to use some of the club funds to build a new pavilion. I’ve now decided to leave the club, part-way through the year – perhaps I don’t like it that the players have all started kneeling down before every… Read more »

Spike
Spike
24 days ago

Yank needs remedial lesson! I join your club. I pay your dues. You fine me for not doing as you say. Then you pay part of my fine so you owe me money?

It seems that the bottom line will be a result of accountant creativity and not any first principles.

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