The £39 Billion Isn’t A Debt Nor A Bill, It’s An Aspiration

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The business pages in The Telegraph have managed to get this wrong. Both Ambrose Evans Pritchard and Jeremy Warner are muttering about damage to Britain’s reputation, even our debt rating, if we don’t meekly cough up the £39 billion divorce bill to the European Union. This isn’t how such matters work, not at all how the creditor, debtor, relationship does work.

Do recall what the claim is. That we’ve agreed to pay certain bills as a result of our membership of the European Union. In the past we said that we’d cough up for future pensions of those who work as federasts. We’d stick some money into the pot to pay for the southern Italian Mafia. We would help build motorways in Slovenia. Shrug, OK, we did.

That doesn’t mean that we then just hand over a cheque for whatever is demanded if we decide we’re not going to sign up for the next set of spending plans.

Refusing to pay the £39bn Brexit bill is not a default, but Boris Johnson should stake out higher ground

Sure, it’s not a default. We’re arguing over how much the bill is. And we’re also – if we’re being sensible – discussing how much we get back in assets we’ve already paid for. Entirely reasonable calculations say that the net bill is in fact zero, possibly even in our favour. OK, that depends upon what we call reasonable but there are certain parts of the EU bill that are unreasonable. Like calling in a cash payment now for guarantees which may or may not be called upon in future.

Britain would be unwise to ruin its perfect record on sovereign debt by defaulting on the EU divorce bill

We should still suggest default though. For threatening not to pay a bill is often enough the only way to be able to negotiate that bill.

And then there’s one more point here. Do we want to be known as patsies for evermore? Then we should be rather altering our negotiating strategy here. The price to be paid is something decided after everything else is agreed. We don’t agree to spend £40,000 on a car and then allow the salesman to decide whether we get a nice new Ford or that old Yugo he’s got around the back. The price is something dependent upon what sort of car we’re going to get.

Sure, that bill for past commitments doesn’t in fact depend upon our continued membership of the EU. That’s the whole basis of the claim that we owe it – we already promised. But that’s never how you negotiate. The price is the last thing on the table, not the first.