In the event of a no-deal Brexit, would the UK pay less to the EU in its divorce bill?
Analysis: The immediate costs of various different Brexit outcomes are only slightly easier to predict than the longer-term consequences, as Sean O’Grady explains
The question of the so-called Brexit divorce bill (and especially its size) has an easy and a tricky answer.
In the (increasingly likely) circumstance that the UK fails to ratify the UK-EU withdrawal agreement, one of the few positives is that Britain could refuse to pay all or part of the estimated £39bn it would otherwise be due to pay in settlement of past and continuing EU financial commitments.
According to the hardest Brexiteers, in Ukip for example, the British are obliged to pay nothing at all.
Others, such as HM Treasury, insist that the UK has legal, political and morally binding debts it must honour, and that it would damage the UK’s reputation and credit rating to “skip” without paying up.
Some believe that the Vienna Convention in international treaties would allow the UK simply to cancel the divorce payment; but even so, there would be adverse consequences if for example the EU imposed legal tariffs or visa restrictions in retaliation.
Of course, a no-deal Brexit might (in fact, by most predictions, almost certainly would) have grave economic consequences that would dwarf the £39bn figure; but on that narrow point alone, a no-deal Brexit might indeed reduce the divorce or settlement payment.
In the longer run Brexit might or might not yield higher economic growth – but it is impossible to say while a future UK-EU trade deal remains no more than a political declaration; and trade deals with other major economic powers such as the US are totally unknown.
We also cannot assume what other policies a UK government might follow, for example on tax breaks for inward investment or on building new public infrastructure and raising productivity.
In reality though, a failure to honour financial commitments – real or perceived – would most probably make for a more difficult economic and security relationship with the EU. That might cost the UK dear, even if it saved some or all of the £39bn in divorce fees now.
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