Bruegel: The UK’s Brexit bill: could EU assets partially offset liabilities?
14 February 2017
The ‘Brexit bill’ is likely to be one of the most contentious aspects of the upcoming negotiations. Estimates so far focus largely on the EU costs and liabilities that the UK will have to buy its way out of, but the EU’s assets' costs could total €153.7bn.
In this post we analyse the whole spectrum of EU assets. This is important, because the UK’s share of these assets may offset part of the various liabilities it is facing. Our key findings are the following:
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The European Union had €153.7 billion of assets at the end of 2015. As far as we know, the existing available ‘Brexit bill’ calculations have considered only a small subset of these assets.
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There are €41 billon assets which can be considered as a kind of EU ‘accumulated wealth’: cash (€21.7 billion), property (€8.7 billion), available-for-sale financial assets (€9.6 billion) and other assets (€1.0 billion). A share of this should probably be apportioned to the UK upon Brexit.
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The outstanding amount of loans granted by the EU was about €56 billion at the end of 2015. These loans do not constitute a ‘net wealth’ because they are fully matched by EU borrowing, and the interest rate charged by the EU is practically the same as the EU’s borrowing cost. However, if EU borrowing is considered as a liability which should be apportioned to the UK on Brexit, then EU loans should also be apportioned to the UK as an asset.
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The place of pre-financing (€45.2 billion) in the Brexit bill is ambiguous. Some of it may essentially “pre-cover” part of the UK’s liabilities for future expenditures agreed while it was still a member. However, it is still very difficult to say how much of an impact this will have on the final bill.
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The final main category of EU assets, receivables and recoverables (€10.3 billion), may not be considered as assets in the Brexit bill calculations, because they are practically composed of the budget contributions that member states failed to pay by the end of 2015.
Full blog post
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