UK Has No Obligation to Pay EU in No-Deal Brexit, Lords Say – Bloomberg

The U.K. has no legal obligation to pay into the European Union budget if it leaves the bloc without a negotiated agreement, lawmakers in the House of Lords said, providing ammunition for Prime Minister Theresa May as she prepares to trigger Brexit.

Britain and the EU’s 27 other members should nonetheless seek a “fair” divorce because of the “gravity” of failing to reach a deal, the upper chamber’s EU Financial Affairs Sub-Committee said in a report published Saturday. A stalemate over the departure bill will make it harder for the government to secure access to EU markets on favorable terms, it said.

“Even though we consider that the U.K. will not be legally obliged to pay in to the EU budget after Brexit, the issue will be a prominent factor in withdrawal negotiations,” Committee Chairwoman Kishwer Falkner said in a statement. “The government will have to set the financial and political costs of making such payments against potential gains from other elements of the negotiations.”

Haggling over how much Britain owes appears set to provide an early test of the formal negotiations, which May has pledged to invoke by the end of March. Austrian Chancellor Christian Kern became the first EU leader to put a value of the bill when he told Bloomberg last month that Britain should be charged about 60 billion euros ($63 billion). 

That sparked anger from May’s Conservative Party, with former leader Iain Duncan Smith calling it “nonsense.” Trade Secretary Liam Fox has dismissed the idea of paying anything at all as “absurd.” 

Good Will Urged

The Lords report detailed different ways an exit bill could be calculated, with the sum ranging from about 15 billion euros to more than 60 billion euros. The amount could include contributions to future commitments made by Britain while still a member of the EU, as well as pension liabilities for those working in EU institutions that could range from 2.5 billion euros to 9.6 billion euros.

After Brexit, the EU will cease to pay contributions to the EU that totaled more than 19 billion euros in each of 2013, 2014 and 2015, the panel said. Net contributions averaged about 7.1 billion euros in recent years, once the annual rebate, agricultural funding and grants and subsidies to the public and private sector are taken into account.  

If Britain pays no exit bill, individual EU members may seek to bring a case against the U.K. for payment of outstanding liabilities, “but international law is slow to litigate and hard to enforce,” the panel said.

“The forthcoming negotiations will be more than just a trial of strength,” Falkner said. “They will be about establishing a stable, cooperative and amicable relationship between the U.K. and the EU. This will not be possible without good will on both sides.”

    UK Has No Obligation to Pay EU in No-Deal Brexit, Lords Say – Bloomberg

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