Matthew Lynn

Britain should pay a Brexit bill - but only on one condition

Britain should pay a Brexit bill - but only on one condition
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Fifty billion? Seventy-five? In its wilder moments, the FT might even splash on a hundred billion pounds as the minimum cost of our exit from the European Union. As the negotiations over our departure reach perhaps the thorniest issue of all, the final bill will have to be settled. But what should it be? If the hardliners on both side would calm down for a moment, then the answer should be very simple. We should agree to cover the cost of the disruption our departure creates, but only in return for a fair deal on trade.

It is probably a mystery to most people why we have to pay anything to leave the EU at all. After all, when you quit your local tennis club, you don’t expect to suddenly be presented with a bill for ten grand to cover the new floodlit court they have been thinking about building and the retirement party for the coach ten years away. You pay your subs until the end of the year, and that’s it. Much the same, surely, should apply to the EU. We pay up until March 2019, and after that we’re off. Article 50 – all mighty 250 words of it – says nothing about extra payments. So we owe nothing.

We may well end up falling back on that position, and if we do it is hard to see any legal claim the EU will have against us. Against that, however, given that we want a fair trade deal from the EU, and given the money we will save over the long-term by getting out, it may well prove polite to offer something. We are the second largest net contributor to the budget after Germany, and our departure is going to blow a big hole in the budget. The rest of Europe has so far given absolutely no thought to how it is going to plug that (The first spending cuts in the EU's history? Getting the Poles to pony up? Flogging off Portugal to the Russians? Who knows?). Our leaving is causing them some big headaches, and while we don’t have to help fix that, it might be neighbourly to do so.

The wilder figures of £80 to £100 billion are crazy. Sure you can torture yourself with some twisted arithmetic to try and justify them (if you have some strong coffee and a couple of aspirin you can get into the numbers here). The EU argues that we have to pay a share of spending commitments vaguely planned for years after 2020, for example. But why? They can get other countries to pay, or cut back. It wants us to pay for relocating EU agencies. Again, why? There is no reason it can’t use buildings in the UK – the e-mail works fine. It wants us to pay a share of pensions for our officials during our years of membership? Why? They were working for the whole of the EU.

But some claims are reasonable. We agreed a budget that runs until 2020, so even though we are leaving in 2019 it is fair we should chip in to that. The EU could slash spending on the day we depart, but that will be hard. We can cover the costs of departure. As any divorce lawyer will tell you, in a separation it is usually best to be generous to the other side – you will end up paying more than you want to anyway, and you might as well spare yourself some pain along the way. There is one important point, however. The EU has to be reasonable as well. It can drop the talk of punishing us, and at the very least offer as good a trade deal as the one it has just agreed with Canada. Anything else is just being childish. The net bill? Around £25 billion with a free trade deal thrown in. Everyone should be able to agree on that and then go home.