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Monday, 4th Sep 2017 by Molly Scott Cato MEP

What it might cost to leave the EU

This post was originally published on the facebook page of Molly Scott Cato, Bristol's Green MEP. 

There is so much political heat being generated about what it might cost to leave the EU that I thought I would just summarise what the argument is about. This is not original work: it's based on the figures provided by Alex Barker of the FT back in May for which he used the negotiating guidelines agreed with the remaining 27 EU members. The UK government has not yet come forward with its own figures for what we might owe or even an alternative method of calculating it. Imprecise estimates range from Boris Johnson’s whistling and John Redwood’s zilch to David Davis's acceptance that we do have a moral and financial responsibility, as yet uncosted.

Why do we owe anything at all? There are two basic answers to that question. Firstly, like most political organisations, the European Union runs a deficit budget system. If the Scots had voted for independence they would have taken their share of the UK national debt with them. The same applies to us leaving the EU. You can think of this element of the bill as being our share of the debt that has been accumulated over the years of our membership. This is estimated at €36.2bn.

Then we have the commitments we have already made before we voted to leave. Because EU budgets work on a seven year period, we have committed ourselves up to the end of this financial framework period, which is 2020. So even if we leave in 2019 we have already agreed to pay for things that go on until 2020. You may have heard the EU's chief negotiator, Michel Barnier, talking about these commitments in the press conference yesterday. We've already signed off on the infrastructure projects in various EU countries as well as aid projects two countries in Africa, Gaza, and so on. It seems reasonable to me to say that if we were part of a political organisation that agreed to the spending, we can't just leave in the lurch the people who already have these projects on the way. This cost is estimated at €27.6bn.

Barnier also insists that we continue to pay our share of the running costs of the EU until we leave, the majority of which will cover continued payments to farmers, which he estimates at €27.4bn. Some member states think we should pay for more EU projects during this phase or that our liabilities here should be extended to the period after we have left.

Then there are a number of less predictable and longer-term commitments. Many Brits have worked in the EU institutions over the forty years of our membership and once we leave we will take on the liability for their pensions from the EU (€9.6bn). We will also be responsible for a share of ‘contingent liabilities’ if projects of funding arrangements that we have agreed to go wrong and end up requiring additional funding (€11.9bn).

Balanced against these liabilities are considerable assets we have acquired during our membership, including a share of buildings that belong to the EU Commission and Council. A deduction will also be made for spending that would have been made in the UK had we continued in membership. Together these add up to around €40bn

That's all the detail we have so far. On the basis of this, and conversations with those close to the negotiations, the FT estimated a net payment of €55bn-€75bn and as much as €91bn-€113bn if the more hawkish members prevail and we continue to fund the central running costs of the EU until the end of this budget period in 2020.

Clear as mud? I hope it helps to take us away from the tabloid mud-slinging at least.

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