Article 50 Triggering Day

Question: How much money will the EU have to payback to the UK after Brexit? An Explanation for Politicians

Answer: Nothing. Zero. Zip. Unless…

Mobile Phone Contracts

This is the bill Juncker is presenting to the UK. It is the remaining commitments that the UK made to the EU. It isn’t a punishment bill. Indeed, if they wanted to claim the full value, and wanted to make it a punishment bill, they would be entitled to more than double that.

Why do I say this? You have to understand how the EU “contract” works and crucially, how it’s funded.

The EU use 7 year budget cycles formed from 3 portions.

  1. The membership fee
  2. 80% of all import tariffs into the EU from outside it (the remaining 20% goes to the member state as a referral fee for the “introduction”)
  3. 0.3% of the VAT charged via a member state (for every £100, we pay 6 pence).

This is to confer the work the EU do on our behalf in managing imports, negotiating trade, making regulations etc. Note, this is on our behalf, which means we don’t have to do it, not a challenge to sovereignty. It’s like outsourcing or delegating operations, rightly or wrongly.

Front Loaded Costs

The EU has done the same. They’ve spent money from the last budget cycle on development projects, including the ERDF (European Regional Development Fund) which has regenerated vast swathes of the OK, including a £60 million per year dependency in Cornwall and some very large parts of Birmingham, Manchester, Leeds, Sheffield and rural areas, albeit spread out. Like the phone after 12 months, the company can’t do anything nor reclaim the remaining value of the phone by selling it.

Like the phone operator, this means that the EU need to be somehow reclaim the money they spent on the UK as well as the costs of budgetary responsibility in this cycle and arguably, if they want to be harsh, lost income (but they’re not).

Outstanding Commitment

We are 2 full years in. So have paid 2x £11.8bn. The remaining costs are thus 5 years of £11.8bn which is £59 billion.

This excludes the loss of trade, loss of future incomes etc. this IMO, having crunched the numbers is an exceptionally fair deal. It is exactly the same as terminating a phone contract. You finish early, you pay you commitments, you go. It is not a punishment.

Jurisdiction and Bad Debt

Categorical tripe!

Source: World Trade Organisation

The logic is simple:

  1. If we fail to reach a deal in 2 years and negotiations are not extended, then we trade under WTO rules. This is understood by everyone.
  2. The WTO have dispute resolution procedures, including sanctions, which they can and will place on countries that fail to address the dispute. They already apply them to Iran and many other countries.
  3. All EU countries are members of the WTO, the EU is a member of the WTO and so are we. Membership of the EU is a subset of the WTO rules.
  4. So we are subject to the same dispute procedures as any other country. 27 members of the 168 members immediately engage their 100 trade partners and you suddenly have a majority of 127 countries to vote on the UK receiving sanctions, if we didn’t resolve it after the first 2 stages. We’d be done for in a heart beat. We couldn’t trade with anyone, including the USA.

Summary

However, as it stands, the UK is not entitled to any cash back. May et al are going into the negotiations having presented to the public the idea they can get back £6 billion or something. If they want to play the “counterclaim” game then I suspect they’ll resort to fraud, but in the worst case, it still leaves a court of arbitration to conclude that the UK will still have to pay £53 billion even if we win that portion of the argument. Dead in the water.

E

EA, Stats, Math & Code into a fizz of a biz or two. Founder: Automedi & Axelisys. Proud Manc. Citizen of the World. I’ve been busy