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Analysis

£44bn bill is just start of May’s truly awful Brexit deal

by Hugo Dixon | 29.11.2017

If you think a €50 billion (£44 billion) payment to the EU for our divorce is bad news, you ain’t seen nothing yet. We’ll end up paying even more money, have to follow EU rules for many years without a say and still lose access to juicy bits of its market. That’s the best guess of where this incompetent, ideology-driven Tory government is taking us.

Although Theresa May is nominally prime minister, the power behind the throne is Michael Gove. His plan is to get out of the EU at any cost. And because he knows that crashing out with no deal would be so appalling that it might derail his “dream”, he is prepared to do whatever it takes to get a deal.

Gove has even got Boris Johnson to go along with the €50 billion or so offer, which the EU has now basically accepted according to the FT and the Telegraph. That’s quite something given that the foreign secretary was only recently saying the EU should “go whistle” if it asked for lots of money. And that’s without even mentioning his lies that we would get £350 million a week back from the EU which would be given to the NHS, a variation of which he even repeated in the House of Commons this week – something that could be a sackable offence.

The government isn’t being honest about money even now. Not only does it want to find ways to hide the true cost; it isn’t even being straight about what we currently pay. Chris Grayling said on the BBC’s Today programme this morning that “we’re already paying £10bn a year in our current membership”. This is false unless you think that’s an acceptable way of rounding up £8 billion. It’s astonishing that the interviewer didn’t pick the transport secretary up on his misleading comment.

But even this isn’t the full story. May isn’t being open about how long a transition we’ll need if we quit the EU. Her two-year “implementation” phase isn’t remotely enough to agree a new trade deal with the club. The Irish foreign minister is more realistic in saying we’ll need five years. For each extra year, we’ll have to pay membership fees. Factor that in and the full bill will be more like £80 billion.

What’s more, during this transition, we’ll have to follow all the EU’s rules and submit to the European Court of Justice’s jurisdiction – without any vote on those rules and without any judge on the court. How’s that taking back control?

The prime minister hasn’t come clean on that either. But if we don’t have a long enough transition, our economy will fall off a cliff.

And what are we going to get at the end of it? A trade deal that shuts us out of some of the best parts of the EU’s vast market. Again, May isn’t admitting this – because she knows voters wouldn’t like being stuck in the slow lane of the global economy for as far as the eye can see.

It’s tempting to say we’re going to end up with such an awful Brexit because the prime minister is a terrible negotiator – and she is. May triggered Article 50 without a plan and so we’re now getting “screwed”, as our former EU ambassador warned we would.

But even a brilliant dealmaker wouldn’t have been able to get a good deal because there is no such thing as a good Brexit. There’s only one bright spot in this sorry story: it’s not too late to stop the madness.

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Edited by Luke Lythgoe

8 Responses to “£44bn bill is just start of May’s truly awful Brexit deal”

  • don’t forget that the individual EU institutions and all the Members States EACH have the right to take any and all agreements with the UK to the ECJ for a ruling on their compatibility with EU law

    that could add another couple of years to the process even when it looks as if we may have reached the end of the tunnel

  • Perhaps now is the time to start building and publishing a Profit & Loss summary of Brexit?
    We have already seen around £3Bn allocated by Hammond to deal with Hard Brexit. There is also the staff being hired for border controls, and the current staffing of Brexit. Also some early relocation of staff and organisations to Europe. I am sure there is much more..not forgetting the current £40-50Bn of course.
    The public is likely to lose the plot of all of this, especially given the way this government spins all the figures. I suppose there is some predicted Profit side, but I haven’t yet seen any (serious) estimates for it. So, having a table of P&Ls which is continually updated and published would be a nice way of focussing on costs and not spin. Any takers to start and maintain this?

  • A good suggestion from George to have a P & L. I’m sure there are some readers with the necessary background to put something together.

    For the benefit of (some) readers who might be discussing how much a billion actually is, this is quoted from Wiki: “In 1974, Prime Minister Harold Wilson confirmed that the government would use the word billion only in its short scale meaning (one thousand million).” I assume that this has not changed.

    Therefore, if we were to annualise the “famous” GBP 350 / mth rebate for the NHS, this would amount to GBP 4.2 billion. Now Theresa May is talking about paying ca. GBP 50 billion to the EU? Something doesn’t add up here. Here’s where George’s P&L would come in handy.

    Apparently, but please correct me if wrong, Boris johnson studied Classics (Ancient Rome, Ancient Greece, Latin, ancient Greek and philosophy), therefore the calculation of the GBP 350 / mth rebate was always likely to be off the mark.

    Thanks to the Office for National Statistics who corrected him on this one – but allegedly hasn’t he just committed contempt of parliament for continuing to claim this figure?

  • George Brooks above indicates

    ‘perhaps now is the time to start building and publishing a Profit & Loss summary of Brexit?’

    This Is already been partially done …..’The Brexit vote has already inflicted a hit of almost £20bn on the UK economy – or around £300m for each week since the June 2016 referendum, according to a new analysis.’ http://www.independent.co.uk/news/business/news/brexit-uk-economy-losses-eu-referendum-result-billions-leave-european-union-a8081841.html

  • A P&L account is a brilliant idea. It would help people see where UK has benefited from being part of EU without emotions and manipulation getting in the way.

    As part of that we must add in the thousands of part funded committed projects in UK being funded by EU money. Projects like Mayflower 400 with a part built boat and events for next 3 years, the UK’s Energy for Waste plants, Solar power, Research projects, Marine projects, Universities half built, railway extensions, flooding defenses half built, arts centres, agricultural equipment and farming subsidies…practically the whole of Cornwall has been rebuilt and remarketed by EU money. All these and more will now need UK funding for their lifetime (some of which is 20 years or more). The divorce bill enables UK to bridge the gap and continue with these projects…that’s before you calculate the set up of a new Administration to handle the new contracts for them and new Trade Deals with new countries…how much new borders and preservation of rights of UK citizens abroad and vice versa is tiny in comparison to hidden costs of continued funding of thousands of projects employing millions of people!!….50bn is cheap as we have left a shortfall in the EU coffers to fund millions of similar projects in other EU countries. EU countries that we need to have new trade deals with.

    There must be a list of EU funded projects within UK published annually somewhere. The total figure of which can be transferred as a Loss.

  • Hugo – I agree with you that the Today programme presenters are pathetic to the point of irresponsibility in not calling out obvious Brexit tosh, but what are you specifically, as a well-known & respected national journalist doing to call them out, relentlessly complain (InFacts preaches to the converted, I fear) , & lobby the DG (an ex news journalist), etc?

    We don’t just need a P&L – and anyway, as you know, the £50bn is neither here nor there – a red herring; we need concrete Brexit-myth- destroying facts out there for everyone to read.

    When it comes to the hard facts of Brexit, MPs of all persuasions are ignorant, BBC journalists are ignorant, even the majority of committed Remainers are ignorant – they rarely come out with the killer facts.

    We need an inventory of truths about Brexit. Are you compiling one?

    We need to destroy the fantasy maths of Dr Fox; we need a crystal clear list of all the EU-permitted ways that we did not mitigate the abuses of immigration (such as they were) under Theresa May at the Home Office (and why aren’t we implementing them now?); we need to publish the authoritative studies that show EU immigration did not affect blue collar employment or wages; we need to quantify and concretise all measurable impacts; we need to rant in more about the electoral abuses by the Leave campaign exposed by your Guardian colleague.

    Is InFacts doing any of this? Or just writing to it’s committed fan base?

  • Excellent Adrian!
    I couldn’t agree more with your points.
    Although not an accountant, I’ll create an Excel spreadsheet template for Hugo, which includes a few suggested positions (cost items) against an annual calender. The template will allow for inputs and outputs on an annualised basis.
    On another of your points, I detest this suicidal, sloppy approach to the UK’s future being conducted in the media and in parliament. Regarding journalists, I just cannot understand why they can’t push politians during interviews with simple but direct retorts such as “Why?”, “Can this be justifed or is this just your opinion or a cabinet view?”, “Are you really serious about what you’ve just said?” Etc.
    Nevertheless, as a platform for summarised and synthesised news, congratulations to Hugo and his team!