UK not legally bound to pay into EU budget if no Brexit deal: MPs

If Britain leaves the European Union without agreeing an exit deal it will not be legally obliged to contribute to the bloc’s budget post-Brexit, a committee of members of Britain’s upper house of parliament said yesterday. Money is likely to be one of the most contentious elements of the upcoming divorce talks. Other EU nations want Britain to pay its share of budget commitments-estimated informally by EU officials at roughly 60 billion euros.

British Prime Minister Theresa May has said only that the government would consider paying into the EU to participate in “some specific European programs”. Under Article 50 of the EU’s Lisbon Treaty, Britain has two years to agree a deal with the EU after which time it will leave without one unless all member states agree to extend negotiations. “If agreement is not reached, all EU law - including provisions concerning ongoing financial contributions and machinery for adjudication will cease to apply and the UK would be subject to no enforceable obligation to make any financial contribution at all,” the House of Lords EU Financial Affairs committee said in a report.

The report also concludes that, in return, Britain will not be in a position legally to claim a share of the EU’s assets on exit unless they are included in a withdrawal agreement. Negotiating what Britain owes is one of the EU’s priorities for this year, with EU officials saying the bloc wants to agree with Britain a formula for calculating the amount rather than defining a concrete sum in advance.

Britain will have to weigh up the financial and political costs of making payments to the EU in return for agreement on things such as EU market access, the committee said.

“If the government wishes to include future market access on favorable terms as part of the discussions on the withdrawal agreement, it is likely to prove impossible to do so without also reaching agreement on the issue of the budget,” it said. “The political and economic consequences of the UK leaving the EU without responding to claims under the EU budget are likely to be profound.” —Reuters