What About This EU Leaving Fee?

There are several ways of looking at the so-called EU divorce bill or leaving fee but, firstly, we should note that the sum of £39 billion was predicated upon a March departure. Since the UK is still paying its regular membership dues until October 31st, the residue will be about £33 billion (give or take a little for exchange rate variation).

The Lisbon Treaty says EU law ceases to apply to a leaving state on the day of its departure. A House of Lords report has suggested that on this basis the UK’s residual liability could be zero unless there is an agreement.

However, Mrs. May unilaterally guaranteed the UK’s annual contributions to the EU up to the end of the latter’s current financial planning period (2014-2020). The amount remaining to be paid under this heading as of 31 October will be around £12 billion (net). This sum would also be paid in the event of the UK remaining in the EU. It is less clear whether it has to be paid if the UK leaves without a deal.

I don’t know whether Mrs. May intended her guarantee to cover the anticipated transition period, when for all practical purposes the UK would have remained a non-voting member of the EU. Some people argue that if we leave without an agreement and hence without a transition period this amount is not payable. Other people say we should pay it anyway ex gratia. I expect the latter as the most likely outcome.

The remaining £20 billion mostly represents reste à liquider, which doesn't seem to translate very well into English. It is an amorphous block of EU undertakings, some of which may not even have started yet, and it is a controversial amount, not least because it represents an attempt to load part of the liabilities of a continuing organisation on to a departing member which is receiving no comparable share of the organisation’s assets and which is already being denied a share in various benefits acquired by use of these assets.

Now, rather in the sense that someday the national debt may theoretically be paid off, likewise someday the EU debt may theoretically be paid off, but nobody is expecting it any day soon. So it is not the case that most of this sum would have to be paid (at least in the foreseeable future) if the UK remained in the EU. To that extent, requiring a leaving member to pay what a remaining member would not pay may, I think, be considered a leaving fee.

It must be dubious whether there is any court in the world in which the EU could pursue a claim for this, although they might make a financial settlement a condition of any future trade deal. As I recall, it was only agreed in the first place in order to open up discussion of a trade deal that never happened because a separate leaving deal could not be agreed, so perhaps we shall eventually come full circle.