- UK will have to keep paying its dues to the EU budget at least until 2020, regardless of Brexit, which is set to materialize in 2019, according to the EU’s budget Commissioner Oettinger.
- That is because the UK has pledged funds to EU’s long-term programs, he has stressed.
- British government has refuted reports it was willing to pay EUR 40 billion for its Brexit divorce settlement.
- Brexit would open a EUR 10-12 billion gap in the EU budget coming from Britain’s contribution.
- EU reform to ‘plug the gap’ will seek to both implement cuts and ask remaining EU members to pay more.
The UK will have to honor its financial commitments to the EU until “at least 2020” despite Brexit, i.e. its exit from the European Union, Guenther Oettinger, EU Commissioner for Budget and Human Resources, has stated.
His remarks come after reports in the British press that the government in London is prepared to pay up to GBP 36 billion (app. EUR 40 billion, USD 47 billion) to the EU to settle the so called Brexit “divorce bill”, a substantially lower figure than the EUR 60 – 100 billion cited by some estimates.
Media reports have alleged the EU plans to ask Britain to pay some EUR 60 billion (USD 71 billion) to settle all financial obligations undertaken by the EU 28 until 2019, which is when Brexit is supposed to become a fact.
However, a report by The Financial Times said the Brexit “divorce bill” to be sought by the EU was estimated at EUR 100 billion (USD 118 billion), almost double the previous estimate.
The talks for Brexit between the EU and the UK finally began on June 19, 2017, about a year after the Brexit referendum was held, and after on March 29, 2017, British Prime Minister Theresa May formally triggered Article 50 of the EU’s Lisbon Treaty, which deals with exit from the European Union, initiating a two-year process of negotiations.
In their June 2016 referendum, the majority of the British citizens voted in favor of Brexit (51.9% to 48.1%).
The guidelines for the Brexit talks adopted by the EU list three main priorities: securing the rights of EU nationals in the UK; collecting Britain’s financial dues; and avoiding a hard border between the Republic of Ireland, which is an EU member state, and Northern Ireland, which is part of the UK, should be avoided.
Britain and the EU recently had their first full session of talks on Brexit, with the two parties remaining at odds on key issues such as citizens’ rights and the divorce bill the UK is expected to pay. May has made it clear the UK is to end free movement of people with the EU in 2019.
Simon Fraser, former head of the British diplomatic services, has said the Brexit talks have not begun well for Britain so far because of an internal discord in the UK Cabinet.
The UK has pledged funds to EU’s long-term programs and those obligations would continue even after the country’s scheduled departure from the bloc in 2019, EU Budget Commissioner Günther Oettinger told the Monday edition of the German daily Bild.
“As a result, London will have to transfer funds to Brussels at least until 2020,” he said.
Oettinger’s comments follow a UK media report that London is ready to pay up to EUR 40 billion (USD 47 billion) in a way of an exit fee.
The EU has previously signaled it was expecting at least EUR 60 billion, although French Economy Minister Bruno Le Maire has claimed the UK owed EUR 100 billion for its divorce bill.
Later on Monday, Prime Minister Theresa May’s spokesman told reporters that Britain did not “recognize” reports that it was willing to pay the EUR 40 billion bill.
“The prime minister made clear in the letter triggering Article 50 that the UK and the EU need to discuss a fair settlement of both our rights and obligations as an EU member state,” the spokesman said.
Brussels is also reportedly prepared to take Britain to court if it does not agree on the price.
Plugging EU’s Brexit ‘Gap’
The EU has an annual budget of some EUR 155 billion, and with the UK set to leave, the Union would face an annual budget gap of some EUR 10 to 12 billion, according to Oettinger.
Brussel’s officials are considering “a mix” of measures to plug the gap, including budget cuts and higher payments from membership from the remaining 27 members.
Germany alone could be required to pay several billions more, the EU Commissioner said.
Another measure to offset the financial loss, according to Oettinger, would be to eliminate “discounts” that various states have on their payments to the EU budget.
The most significant of those is the so-called UK rebate, a complex financial process established in 1985, which returns several billions back from the EU to Britain’s budget every year.
“If this ‘mother of all discounts’ is to be abolished through Brexit, all the other membership rebates should also be eliminated,” Oettinger told Bild.
“That would result in a significant administrative simplification and it would end the horse-trading that has accompanied budget negotiations up to now,” he elaborated
The next round of talks between the EU and the UK is set to start on August 28 in Brussels.