Watchdog: Final Brexit bill ‘remains uncertain’

divorce: Cost of EU exit settlement could differ from government figure

The full cost of the UK’s Brexit divorce bill remains uncertain and could differ from the £35-39 billion figure put forward by the government, financial watchdogs have said.

While the National Audit Office (NAO) described the estimate as “reasonable” it stressed the sum was based on a number of assumptions about what will happen in the future.

The total cost of the exit settlement cannot be defined until there is more certainty in areas like UK economic performance in 2019 and 2020, the cost of pension liabilities, how much British organisations will continue to receive in EU funding after withdrawal, and exchange rate fluctuations as the divorce bill will be paid in euros, according to the study.

The report states: “Relatively small changes to some assumptions about future events could push the cost outside of HM Treasury’s £35 billion to £39 billion range.”

How much the UK contributes to the EU annual budgets in 2019 and 2020 will be calculated on the basis of the UK’s future economic outlook, which will also partly determine Britain’s share of outstanding commitments and liabilities after 2020, the report states.

Due to EU financial rules the UK could have to pay up to £3bn more in budget contributions after formal withdrawal in March 2019 than the Treasury estimates in order to offset earlier payments being lower, the NAO said.

The UK could have to pay towards other costs, which are not in the government estimate, such as potential liabilities that could depend on future events, and Britain will also provide a guarantee worth 35.7bn euro to the European Investment Bank.

However, the NAO report said the Treasury and EU “consider the risk of these liabilities crystallising to be remote”.

The UK will also pay £2.9bn to the UK European Development Fund for overseas aid which is not featured in the exit settlement estimate because the fund was not established under EU treaties.

Britain’s contribution to the EU pension scheme may last until 2064 unless the government decides to pay off its commitments earlier in a lump sum which would present “risks and opportunities to the total value the UK may be liable to pay”.

A government spokesman said: “We have always been clear that we will honour commitments made while being part of the EU, and we have negotiated a settlement that is fair to UK taxpayers and means we will not pay for any additional EU spending beyond what we signed up to as a member.

“The NAO has confirmed that our estimated figure is a reasonable calculation and we are now discussing our future relationship.”

Relatively small changes to some assumptions about future events could push the cost outside of HM Treasury’s £35 billion to £39 billion range. NAO REPORT