To budget or not to budget

THE Budget may have contained surprises for some, but not for others. With a few more million saved here and a few more million spent there, but no ‘rabbits out of the hat’.

But when it comes to budgeting there is going to be a big bill for leaving the EU and people have speculated it may be as high as 60 billion euros, or as little as zero. What is surprising is that such an important factor affecting Article 50 is only now coming to light.

Baroness Faulkner, chairman of the EU Financial Affairs Sub-Committee of the House of Lords, said that if there is no withdrawal agreement pursuant to Article 50 then there is no obligation on the UK to pay. This may have come as a surprise to many.

The sub-committee did take expert advice but found that this was conflicting, and as such used its own lawyers to decide the principle of whether or not there is a payment due on exiting the EU. Based on the principles of the Vienna Convention on the Laws of Treaties there is no obligation to pay. This is because the obligation is contained only within treaties and not within Article 50 itself. Article 50 deals with exit, but is silent on the question of payment.

There are no courts that can regulate or definitively decide on this matter. The only exception would be if an individual member state decides to take the UK to the International Court of Justice in The Hague, on the basis of losses suffered as a result of the UK’s exit.

Despite the above, given that the EU is a political beast and the Prime Minister is committed to signing a withdrawal commitment, we all know that a payment will probably have to be made to secure an orderly exit, and one which ensures limited market access and participation in some EU programmes. Without such a payment from the UK there will be a 12% hole in the EU budget. Colin Rodrigues is corporate

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