Saturday, October 06, 2018
Brexit divorce bill rockets
Those who are still suffering from the delusion that we will be £350 million a week better off from leaving the EU need to read this article in the Independent, which details how the cost of legal obligations that the UK has entered into is rising every day.
The paper says that in the early stages of negotiations Britain agreed to pay certain costs like the those of British EU officials’ pensions, as well as honouring guarantees for EU projects it had already made. Both sides stopped short of putting an official figure on the future payments, in what was seen at the time as an attempt to soften the political blow for the Prime Minister.
Instead, negotiators set a formula to work out how much Britain would have to pay, though unofficial estimates have generally converged on a net figure of around £39 billion, contingent on a withdrawal agreement being signed. However, the inputs to that formula look set to rise faster than expected, meaning the bill is likely to be higher than anticipated:
The European Court of Auditors said in a report released on Thursday that EU’s pension liabilities have unexpectedly increased to 73.1 billion euros in 2017 – up from a previous estimate of 67.2 billion euros.
The so-called “contingent liabilities” – the guarantees on investment projects – have also somewhat increased, too. These are up to 123 billion euros in 2017 from 115.3 euros the previous year.
This latter category may never trigger payments, however, if the projects do not fail – as they are simply guarantees.
Britain has also agreed to pay its existing EU budget contribution to 2020, a 6.3 billion euro component of the divorce bill which is unchanged by the new figures.
Using an on-line currency calculator, and putting aside the contingent liabilities, I make that nearly £70 billion in total that the UK is now committed to paying on exit, or £1.342 billion a week. Trying putting that on the side of a bus.
The paper says that in the early stages of negotiations Britain agreed to pay certain costs like the those of British EU officials’ pensions, as well as honouring guarantees for EU projects it had already made. Both sides stopped short of putting an official figure on the future payments, in what was seen at the time as an attempt to soften the political blow for the Prime Minister.
Instead, negotiators set a formula to work out how much Britain would have to pay, though unofficial estimates have generally converged on a net figure of around £39 billion, contingent on a withdrawal agreement being signed. However, the inputs to that formula look set to rise faster than expected, meaning the bill is likely to be higher than anticipated:
The European Court of Auditors said in a report released on Thursday that EU’s pension liabilities have unexpectedly increased to 73.1 billion euros in 2017 – up from a previous estimate of 67.2 billion euros.
The so-called “contingent liabilities” – the guarantees on investment projects – have also somewhat increased, too. These are up to 123 billion euros in 2017 from 115.3 euros the previous year.
This latter category may never trigger payments, however, if the projects do not fail – as they are simply guarantees.
Britain has also agreed to pay its existing EU budget contribution to 2020, a 6.3 billion euro component of the divorce bill which is unchanged by the new figures.
Using an on-line currency calculator, and putting aside the contingent liabilities, I make that nearly £70 billion in total that the UK is now committed to paying on exit, or £1.342 billion a week. Trying putting that on the side of a bus.
