PM told: Walk out if exit bill is £85bn
THERESA May should walk out of Brexit talks if EU leaders refuse to slash their demands for an £85billion “divorce fee”, a leading think tank said last night.
The sum put forward by European Commission officials was described as “going too far” in a paper published by the Institute of Economic Affairs.
The think tank argued that a compromise payment of up to £26billion to cover existing EU budget commitments and other liabilities including staff pensions would be enough.
And it said the Prime Minister must be ready to “walk away without paying a penny” if European Commission president Jean-Claude Juncker insists on asking for more than that figure.
Julian Jessop, the institute’s chief economist, said: “The Brexit negotiations will need to decide how much the UK will pay the EU to settle financial obligations undertaken while it was a member. Many Brits would suggest that the right figure is in the ballpark of ‘zero’.
“However, some EU officials have suggested that the bill should be north of 100billion euros (£85billion).
“A compromise towards the lower end of this range might be acceptable – a figure of around £26billion could be justified using certain principles.
“But if the two sides fail to agree a good deal on the terms of any future relationship, the UK can, and should, walk away without paying a penny.”
Mr Jessop argued that Britain’s exit from the EU should be treated like a member leaving a club rather than a “divorce”, where we simply close our account in March 2019. He pointed out that the House of Lords had concluded that “the UK would be on strong legal ground if it declined to pay any divorce bill at all”.
But Mr Jessop warned that simply refusing to pay anything on departure “may backfire” and undermine the country’s chances of getting a favourable trade deal.
He added: “These are early days in the negotiations and there is surely room for compromise.
“But if there is no deal by March 2019, the UK should be ready to start saving money straight away.”
He said a £30billion settlement would be consistent with meeting the EU halfway.