The divorce bill from the European Union could run to the tens of billionsby Iain Begg / May 18, 2017 / Leave a comment
Will it be sixty billion euros, one hundred billion or not a brass farthing? As so often when money is involved, the rhetoric around the likely “divorce” bill for the UK to leave the European Union has become increasingly poisonous, despite the fact that no official demand from the EU side has yet been put forward. Equally, the UK has yet to make an opening offer.
Nor is the legal position as clear as the protagonists assert. The House of Lords European Committee caused a stir by saying the UK could walk away with no obligation whatsoever, a verdict welcomed by the government. Legal advice to the EU institutions takes an opposite view. Both extremes, in practice, are largely irrelevant, unless the negotiations degenerate into so hostile a Brexit that it ends not around the table, but in the courts.
There are several potential components of a Brexit bill. Although complex and messy, they boil down to a handful of conceptually distinct elements.
The first is commitments already made by the EU or due to be made before the date of Brexit, known in Brussels-speak as reste à liquider (RAL), meaning “still to be settled.” These commitments arise because many of the EU’s programmes, especially for research and regional development, are multi-annual. Typically, projects will receive a proportion of their money at the outset, but will—quite properly—only receive final payment when the project is completed. For example, there might be funding for new transport links that take several years to build, with binding contracts signed in 2017, but only concluded in 2021.
Second is the fact that the EU budget is set in a seven-year framework lasting from 2014 until the end of 2020, with the broad headings of expenditure agreed in a Council regulation dating from 2013. This is a legal act, approved by the two legislative bodies of the EU—the Council of Ministers (including the UK) and the European Parliament. Some on the EU side, especially the net recipients from the budget, argue that the UK is liable for the full seven years, irrespective of when Brexit occurs. On the assumption Brexit is completed by the end of March 2019, the implication is…