May could legally walk away from £50bn EU divorce bill
Peers say Brussels cannot enforce costs but warn of repercussions
THERESA May could legally walk away from an estimated £50 billion bill for Britain’s divorce from the European Union without paying anything, according to peers.
But the high-risk move could have massive political and economic costs, they warn in a new report.
It comes just weeks after Sir Ivan Rogers, the UK’s former ambassador to Brussels, told MPs that other European leaders were planning to hand the UK a Brexit bill of between £35bn-50bn.
Countries across the continent believe that the UK has financial responsibilities for everything from planned multi-billion-pound infrastructure projects to pension liabilities that do not end with the country quitting the EU.
But Brexiters have suggested that the UK should tell Brussels it will not pay up. The new report by the House of Lords EU Financial Affairs Sub-Committee, also criticises the Prime Minister’s threat to walk away from the negotiating table if the terms of the “divorce settlement” are too low.
Mrs May has said that no deal would be better than a bad deal.
But critics warn that would force the UK to rely on World Trade Organisation (WTO) rules, which the Confederation of British Industry says would place tariffs on 90 per cent of the products British firms export to the EU.
Peers said that both sides “should recognise the gravity of a no-deal Brexit”.
Failure to reach an agreement on the UK’s “exit bill will undermine the Government’s aim to negotiate market access on favourable terms”. The UK would be under “no enforceable obligation” to make financial contributions to the EU budget after Brexit, it finds.
But refusing to pay would “severely damage” the prospects of reaching friendly agreement on wider issues, including access to European markets.
Sir Ivan also told MPs that negotiations were likely to descend into “name-calling” and “fist-fighting” before any deal was reached.
He explained that the thinking in Brussels was that the “implications for the UK of walking away without any deal on the economic side and without any preferential arrangement and walking into a WTO- only world are – from their perspective, which may be a misreading of us – so unpalatable that we won’t do it.
Baroness Falkner of Margravine, who chairs the EU Financial Affairs Sub-Committee, said: “The UK appears to have a strong legal position in respect of the EU budget post-Brexit and this provides important context to the Article 50 negotiations.
“Even though we consider that the UK will not be legally obliged to pay in to the EU budget after Brexit, the issue will be a prominent factor in withdrawal negotiations. The Government will have to set the financial and political costs of making such payments against potential gains from other elements of the negotiations.
“The forthcoming negotiations will be more than just a trial of strength.”
Meanwhile, Brexit Secretary David Davis said that a future free trade agreement the UK seeks with the European Union would be “massively important to both sides”.
Mr Davis was speaking after he met the Slovak prime minister Robert Fico.
He said that the UK exports goods worth £200bn to the EU, while EU nations export goods worth £250bn to the UK.
‘‘ Britain will not be legally obliged to pay into the EU budget after Brexit, but it will be prominent factor