The EU has raised its demand for Britain's Brexit bill to an upfront gross payment of up to €100 billion, according to a Financial Times analysis of new demands driven by France and Germany.
Following requests from member states, EU negotiators have revised their initial calculations to maximise the liabilities Britain is asked to cover, including post-Brexit farm payments and EU administration fees in 2019 and 2020.
The hefty bill represents one of the biggest early obstacles to a smooth Brexit
Although the final net bill would be lower than the €100 billion upfront settlement, the more stringent approach to UK obligations significantly raises the estimated €60 billion charge mentioned by European Commission president Jean-Claude Juncker. It also reflects the hardening position of many EU members, which have dropped reservations about the political risks of the bill to pile on demands to help plug a Brexit-related hole in the bloc's common budget.
Assumptions
Paris and Warsaw have pushed for the inclusion of post-Brexit farm payments, while Berlin is against granting Britain a share of EU assets. Estimates of Britain's bill vary because they include assumptions about its exit date, its share of contributions, UK receipts and the type of liabilities it has to honour.
The hefty bill represents one of the biggest early obstacles to a smooth Brexit. British prime minister Theresa May rejected the notion of an exit bill at a recent dinner with Mr Juncker, saying that any financial terms would be tied to securing a trade deal by 2019. Yesterday, she promised to be a "bloody difficult woman" in talks.
The commission's tougher approach denies London a share of assets such as buildings
Michel Barnier, the EU's chief negotiator, has said no figure will be set until the end of the Brexit process, and payments could be staggered. But he wants Britain to agree a methodology before trade talks can begin. He will unveil a draft negotiating mandate, including the Brexit bill assumptions, today.
Share of assets
As well as adding €10 billion-€15 billion of mainly farm-related payments, the commission's tougher approach denies London a share of assets such as buildings. It requires upfront payment for contingent guarantees and loans to countries such as Ukraine, with Britain reimbursed as loans are repaid.
According to the FT calculations, this brings the upfront gross settlement demand to between €80 billion and €100 billion. Over a decade or more, this would be reduced in net terms to between €55billion and €75 billion as Britain received its share of EU spending and repaid EU loans. The Bruegel think tank estimates that Britain would make an upfront payment of €82 billion-€109 billion which would net out to €42 billion-€65 billion in the long term.
The commission has never published its preferred methodology. But in early talks it took a more conservative view of UK liabilities. The Financial Times previously calculated the figure to be €40 billion-€60 billion in net terms, a number that corresponds to Mr Barnier's informal estimates shared with member states.
– (Copyright The Financial Times Limited 2017)
