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No, Johnson, we won’t have £39bn if we crash out

by Jekaterina Drozdovica | 25.07.2019

The new prime minister got his facts wrong again, on his first day in Parliament. Our divorce fee is actually £33bn and we’d owe at least a chunk of it even if there’s no deal.

Boris Johnson said in his first statement in the House of Commons: “We would, of course, have available the £39bn in the withdrawal agreement to help deal with any consequences” [of a no-deal].

The first problem with the prime minister’s statement is that he has got the wrong number. £39bn is, indeed, the financial settlement agreed before Brexit was delayed. But shifting our exit date to October 31 makes the UK a member state for seven more months, during which it will continue to pay its fees. These additional contributions will be subtracted from the original settlement, taking the divorce bill down to £32.8bn, according to the Office for Budget Responsibility.

The second problem is that the government accepts that we must pay our bills. Geoffrey Cox, who has been reappointed as attorney general, said in the House of Commons in December: “The view of the government, and my view, is that we would have obligations to pay a certain amount of money were we to leave the European Union without a deal.”

Johnson’s rhetoric is based on a wrong assumption that the bill is a reward to the EU for a successful trade deal. Cox has made clear that linking Brexit bill payments to the progress of any trade talks would be illegal in unpublished legal advice, according to the Telegraph. The money represents unresolved British liabilities irrelevant to trade negotiations. These include previously agreed commitments, liabilities for loans, pension promises and other expenses. 

Johnson could try to renegotiate the settlement, asking the EU for a discount. But refusing to pay it entirely would have dire consequences. The UK would damage its reputation as a country that obeys the law. That would make it harder to negotiate deals with other countries. Meanwhile, the EU would probably refuse to do any deals with us until we had paid what we owe – and, if we still refused, it would pursue us in the International Court of Justice.

If the new prime minister continues how he has started, the next few months will be filled with statements that mislead the public and antagonise our friends in Europe.

Edited by Hugo Dixon

11 Responses to “No, Johnson, we won’t have £39bn if we crash out”

  • The £39bn is to settle our share of ongoing EU liabilites – yes I know that you all know that.
    We could reduce it somewhat if former UK MEPs and Eurocrats etc renounced their generous pensions.
    Step forward N Farage.
    Step forward S Johnson.
    Any other EU pensioners who want to leave – you can step forward too.

  • Patrick, another Brexiteer with very little apparent understanding of just what is going on. As the article said, it’s about liabilities and the pensions of people like Farage are part of that. I know he’s proud of losing 700 grand before coffee time in a former job, but a fat pension like that coming with being MEP is something he’s unlikely to forego. As a result of that he won’t do anything against it. In fact, previously he said he was skint and needed it. Comprendo mate?

  • A court settled exit figure will almost certainly be lower but that’s not the point. In the event of no deal, and EU tarriffs, the UK would charge reciprocal tariffs. The UK has a significant trade surplus with the EU meaning that if the UK chose to, it could use tariff receipts to offset a lot of the impacts of no dea

  • And, incidentally, another article that preaches to the converted if I may be so bold to mention it. We know that brexiteers and their puppet masters live in a strained relationship with things like facts and truth. But what does need to be organized to ensure that the good old tribal leanings are not standing in the way of clobbering Johnson and Farage when the time comes?

  • Very short-sighted of Boris to be withholding the £33 billion. Does he not understand that we have to do a trade deal, amongst many areas of joint co-operation, with Europe? How would most businesses or customers respond, in future negotiations, if a proposed partner had reneged on a previous payment?
    With not too many favours I would imagine.

  • Precisely – how would you feel about selling something to someone who promises to pay you and then says he’s not going to ? You’d be pretty pissed off. I imagine, and wouldn’t want to do any more deals. Furthermore you’d put it about that that person was untrustworthy. I do hope that those about Boris – and I don’t just mean his lick-spittle acolytes, but the good old Civil Service, re-educates him, or there will be total disaster ahead.

  • Sorry am I missing something here?

    I was under the impression that the £39bn was subject to an agreed withdrawal deal. If there is no agreement and we leave on WTO terms then I think the only way is international arbitration to decide on exactly what we owe. In the meantime we should pay nothing!

  • @ Peter – These are on-going commitments which the UK owes into the EU pot, deal or no deal. The May Government have signed up to them. If we are daft enough to head into a No Deal scenario, the Government being tied up in international arbitration is the last thing UK business or anyone else needs. The reputation of the country as a trustworthy business partner would go to pot. And we would all suffer.

  • Peter,
    You are missing a lot. If we renege on the amount that was agreed we owe and fall onto WTO tariffs the recent OBR report has said we will need to increase borrowing by around 30-40 Billion pounds a year immediately to cope with the fallout. Our credit rating will take a further hit as it will demonstrate our word is word worth diddly squat, and therefore the interest cost of our borrowing will be increased. Our interest payments on our current level of borrowing is around 4 times our annual EU payments, so it will soon mount up. Johnson et al. will try to dress this up but in real terms it will be mean another dose of austerity measures, while the richest individuals will be given tax cuts to keep them voting Conservative.
    The question, is how long are you going to believe his BS.

  • Funny how Brexiteers among the readers appear unable to just read what the writer put down in the article. I think we touch the bottom line of the Brexit problems here.

  • All these “infacts” articles are opinion articles, they dont seem too include many “facts”.
    Admitting the UK has contributed nearly £5 billion too the EU over a short period of time without actually stating the fact, priceless