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Brexit divorce bill
The term "Brexit divorce bill" refers to payment due to the European Union (EU) from the United Kingdom (UK) when it left the EU (a process commonly referred to as Brexit) to settle the UK's share of the financing of all the obligations undertaken while it was a member of the EU. In the Withdrawal Agreement, it is officially referred to as the "financial settlement".
As of July 2022[update], HM Treasury's estimate of the financial settlement when the UK left the EU on 31 January 2020 was £30.2 billion (€34.8 billion). From 31 January to 31 December 2020, the UK was in a transition period, and continued to contribute to the EU as if it were a member until the end of the transition period, reducing the amount of the financial settlement. From December 2020, the payments accrue twice a year. By 31 December 2023, the UK had paid a net amount of £23.8 billion, leaving an estimated £6.4 billion outstanding. A further £2.4 billion was due to have been paid by May 2024 with the remaining £4.0 billion being payable up until 2065.
The UK and EU began negotiations with differing perspectives on the basis for the bill. The UK side saw it as payment for preferential access to the European Single Market whereas the EU saw it as obligations previously agreed to funding the budget round ending 2020 and for its share of longer-range commitments. In December 2017, the negotiators reached agreement on the scope of these commitments and the methods for their valuation.
During the 2016 United Kingdom European Union membership referendum, Vote Leave claimed that the UK was sending £350 million to the EU every week (the Institute for Fiscal Studies estimated the true net figure as being about half this.). Following the referendum, the UK signalled that it may consider paying the EU to attain preferential access to the European Single Market and may offer to pay liabilities on a moral and co-operative basis, even if not legally obliged to do so, to secure a preferential working relationship with the EU. In Prime Minister Theresa May's speech on 17 January 2017 setting out the UK's plans to negotiate Brexit, she stated:
"And because we will no longer be members of the single market, we will not be required to contribute huge sums to the EU budget. There may be some specific European programmes in which we might want to participate. If so, and this will be for us to decide, it is reasonable that we should make an appropriate contribution. But the principle is clear: the days of Britain making vast contributions to the European Union every year will end."
Despite the claim, ministers and officials, including Secretary of State for Exiting the European Union David Davis, had already indicated that some kind of payment to the EU might have to be part of a future trade deal and the House of Lords were told in January 2017 that the UK may have to contribute to the EU's budget after Brexit because of previous obligations entered into, unless a deal is done.
The leaders of France and Germany both stated that the UK would need to agree to terms regarding departure, including in relation to a divorce bill, before discussing future relationships. This was reinforced by EU27 guidelines issued to the remaining 27 countries.
Estimates of over £50 billion appeared for a divorce bill and there were concerns raised about whether, and how much, the UK would owe the EU and that such a dispute could lead to an early end to negotiations, with the UK leaving the EU without a deal. Secretary of State for International Trade Liam Fox claimed it would be “absurd” for the UK to pay a large sum and Conservative Party MP John Redwood said there was no legal basis to the demands.
Brexit divorce bill
The term "Brexit divorce bill" refers to payment due to the European Union (EU) from the United Kingdom (UK) when it left the EU (a process commonly referred to as Brexit) to settle the UK's share of the financing of all the obligations undertaken while it was a member of the EU. In the Withdrawal Agreement, it is officially referred to as the "financial settlement".
As of July 2022[update], HM Treasury's estimate of the financial settlement when the UK left the EU on 31 January 2020 was £30.2 billion (€34.8 billion). From 31 January to 31 December 2020, the UK was in a transition period, and continued to contribute to the EU as if it were a member until the end of the transition period, reducing the amount of the financial settlement. From December 2020, the payments accrue twice a year. By 31 December 2023, the UK had paid a net amount of £23.8 billion, leaving an estimated £6.4 billion outstanding. A further £2.4 billion was due to have been paid by May 2024 with the remaining £4.0 billion being payable up until 2065.
The UK and EU began negotiations with differing perspectives on the basis for the bill. The UK side saw it as payment for preferential access to the European Single Market whereas the EU saw it as obligations previously agreed to funding the budget round ending 2020 and for its share of longer-range commitments. In December 2017, the negotiators reached agreement on the scope of these commitments and the methods for their valuation.
During the 2016 United Kingdom European Union membership referendum, Vote Leave claimed that the UK was sending £350 million to the EU every week (the Institute for Fiscal Studies estimated the true net figure as being about half this.). Following the referendum, the UK signalled that it may consider paying the EU to attain preferential access to the European Single Market and may offer to pay liabilities on a moral and co-operative basis, even if not legally obliged to do so, to secure a preferential working relationship with the EU. In Prime Minister Theresa May's speech on 17 January 2017 setting out the UK's plans to negotiate Brexit, she stated:
"And because we will no longer be members of the single market, we will not be required to contribute huge sums to the EU budget. There may be some specific European programmes in which we might want to participate. If so, and this will be for us to decide, it is reasonable that we should make an appropriate contribution. But the principle is clear: the days of Britain making vast contributions to the European Union every year will end."
Despite the claim, ministers and officials, including Secretary of State for Exiting the European Union David Davis, had already indicated that some kind of payment to the EU might have to be part of a future trade deal and the House of Lords were told in January 2017 that the UK may have to contribute to the EU's budget after Brexit because of previous obligations entered into, unless a deal is done.
The leaders of France and Germany both stated that the UK would need to agree to terms regarding departure, including in relation to a divorce bill, before discussing future relationships. This was reinforced by EU27 guidelines issued to the remaining 27 countries.
Estimates of over £50 billion appeared for a divorce bill and there were concerns raised about whether, and how much, the UK would owe the EU and that such a dispute could lead to an early end to negotiations, with the UK leaving the EU without a deal. Secretary of State for International Trade Liam Fox claimed it would be “absurd” for the UK to pay a large sum and Conservative Party MP John Redwood said there was no legal basis to the demands.