Brexit bill: what it means

It is virtually impossible to turn on (or read) the news these days without a reference to the Brexit bill or divorce settlement. This is what you need to know about it.

For those who understand EU law this is easy to assimilate and the premise on which it is  based is: the EU works on multiannual  programmes that go from environmental issues, jobs, research and innovation and many others which cover all EU policies… and to fund all those policies some budgetary projections are put in place. The so-called Multiannual Financial Framework is not the budget per se but sets the ceilings in terms of expenditure for a given policy on a given timeline.  The current framework covers 2014-2020 (see  policies here). The EU’s funds to cover those expenses come from custom duties, VAT percentages and Member States contributions (see here).

As the UK was a Member State with its full rights and obligations when the framework was adopted, like the other Member States, it entered into some financial obligations for the whole period i.e. until 2020. The fact that the UK has decided to leave the EU and has already kick started the two-year period for the exit negotiations (art 50 TEU) bears no relevance on the commitments as does the name of the Prime Minister who will lead (from the UK-side) those negotiations. Therefore, it is irrelevant who becomes Prime Minister on June 9 (i.e. the vote on June 8 will bear no weight on that).

Let’s use a metaphor to illustrate the financial implications of the Brexit “bill”.  Think about a mobile contract (no handset included just the minutes, texts and data). Until a couple of years ago no mobile provider allowed you to have a rolling 30-day contract, you had to sign up for 12 or 24 months and if you cancelled your contract before the end date you were liable for the whole amount of the contract. Here is the same…..if you agreed to be bound for a number of years – under the multiannual financial projections – you “must” pay the outstanding bill if you leave before it ends.

All Member States agreed to contribute towards the framework so the fact that the UK decides to leave should not have any extra implications for them (they will be affected post-Brexit). Why would they have to be affected by that?! surely in a reverse situation i.e. any other Member State leaving not the UK  anyone could see it, right? would the UK consider it fair to pay for the departing State?

There is no “punishment” bill towards the UK…. it is simply put a settlement of accounts or pre-existing obligations so the more the UK – government and media –  distort that the more damage they will create even before the proper negotiations begin.

Bringing up the move (and who needs to pay for it) of the European bodies currently in the UK – European Medicines Agency , European Banking Authority –  to other EU Member States when Brexit occurs is perhaps not advisable now but it is something to keep in mind…. as the EU today is reminding the UK.  But it is not clever either to talk about a share of the bottles of wine owned by the EU as belonging to the UK…. or a share of the EU buildings.

There will be no winners in Brexit. The UK will possibly thrive in a few years time but not in the immediate aftermath. The EU will be damaged as well and its credibility and survival seriously threatened if these negotiations sour beyond an acceptable point.  This will not be an amicable divorce, that is becoming clear. However, it would be advisable that all parties involved make it as bearable as possible to those who have to live with the consequences i.e. the EU citizens in the UK and UK citizens in the EU…. this is not only about business there are millions of lives at stake.

We are in unknown territory …..and it seems both sides are making one mistake after another and the chances of a no-deal in March 2019 are increasing on a daily basis.

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