Divorce bill to leave EU soars £5bn to £42.5bn

THE Brexit divorce bill could soar to £42.5billion after the Treasury hiked its estimate of the payments owed to the European Union by more than £5billion.

Simon Clarke, Chief Secretary to the Treasury, blamed rising interest rates affecting EU pension obligations for the surge in costs.

Originally the Government estimated the bill to cover spending commitments made during the Britain’s 47 years as a member of the bloc would be between £35billion and £39billion.

But the Treasury’s latest figure put it at £42.5billion – up £5.2billion from a year ago when the amount was £37.3billion.

In a written statement, Mr Clarke said the rise is mainly

‘Unprecedented rise in inflation’

down to the UK’s obligations for EU pensions. ‘The primary drivers are the latest discount rates and inflation assumptions, which are centrally set by the Government for valuing long-term liabilities,’ he added.

‘However, given this is a multidecade liability, the variables used in this forecast will continue to fluctuate up and down.’

Up until the end of last year, the UK said it has paid £5.8billion to the EU as part of the agreement to leave the bloc in January 2020.

A Treasury spokesman added: ‘The unprecedented recent rise in inflation and changes in discount rates have increased our pensions liability, which is the biggest reason for the increased estimate.The true cost of the settlement is confirmed when payments are made, based on the value at the time. The Treasury continues to monitor and verify these payments.’

Britain is also paying contributions to continue taking part in EU research programmes.