ICAEW: Analysing the EU Exit Charge

17 May 2017

Using the EU’s 2015 accounts, ICAEW outlined the potential bill due in March 2019 with three potential scenarios - high, low, and a more likely central scenario - once the rebate and money returning to the UK is accounted for.

• Potential exit charges range from a low cost of £5bn to a maximum cost of £30bn, with the central scenario cost £15bn (based on an exchange rate of €1.20 to £1) - equivalent to £225 per person expected to be living in the UK in 2019.
• Currently the UK’s share of the EU budget each year is approximately £20-£21bn, before an estimated rebate of £5-6bn, and spending returning to the UK of £6- £7bn.
• While the estimated rebate is expected, the EU could attempt to withhold this if there is no agreement on wider exit charges.
• Liabilities include EU staff pension and sickness payments which will be close to £63bn when the UK leaves, and of which the UK’s share is £10bn. This could be a one-off settlement or the UK could agree to contribute £0.2bn a year for the next 50 years or so.
• The value of the EU’s fixed assets will also need to be determined.
• Additional areas for negotiation include the European Investment Bank (EIB), of which the UK has a 16% share. As ownership of the EIB is restricted to EU members, the UK may need to sell its stake to other EU members, or existing rules may need to change.
• The EU is likely to argue that costs incurred caused by the UK’s decision to leave should be paid for by the UK rather than by other member states.

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