When do EU Payments Stop?


One of our readers wrote in to ask a question about Brexit. He asked what are the implications for Britain, whilst still a member, are we by default to be tied into the next budget period were it finalised prior to our anticipated, if somewhat unconfirmed, leave date of 31 October? This is a good question as most of the relationship between the UK and the EU has been about money and there is no reason to think there won’t be a clamour for more.

The answer to the question is in two parts. It depends on whether we come out on a no deal or if we come out on a deal. If we come out on a deal our financial obligations will be dealt with by the withdrawal agreement of that deal. Theresa May’s deal had an agreement in it for us to pay £39Bn in regard to our financial obligations to the EU. If that stays the same in a Boris Johnson deal then that would be the entire financial commitment. There would be no extra money for any new accounting period. If for any reason that figure was to change as a result of fresh negotiations then the new figure would encompass our financial obligations.

If we come out on a no deal then the situation would be slightly different. Under those circumstances the UK might argue that we were under no financial obligation at all to the EU and the EU would argue that we owed monies in regard to the confirmed financial commitments made during the past budget years. This should amount to the same figure that was in the Theresa May deal and not include any further financial commitments. It would be intellectually dishonest of the EU to argue that we owed money for a new period after the negotiation had ended. While there would be no agreement to make any payment that would compel us to pay, our future relationship with the EU would depend on the decisions we made. There would therefore continue to be pressure on us to pay the outstanding £39BN.

The answer therefore is no matter whether we come out with a deal or without a deal there should be no obligation to pay into future budgets. At the same time we would not expect to receive any EU subsidies for the same period.

One of the reasons why it would be a good thing if Boris was able to make a deal with the EU is that it would settle the answer of our financial obligations and we could draw a line under the matter. It is likely that even if he does a deal the figure for our outstanding debt to the EU won’t change as this is not something he is attempting to renegotiate.