Peter Foster @pmdfoster Europe Editor of the Daily Telegraph. Formerly based in Washington DC, Beijing and New Delhi. Opinions my own. Jun. 10, 2019 3 min read

Right. It's the £39bn question...could @BorisJohnson or other hard brexiteer PM really withhold payment of the #Brexit bill. Legally? Politically?

(Shorter: not really)


Let's start with the legal position. Brexiteers often sight this March 2017 House of Lords Cmme report as grounds for saying that in a 'no deal' the UK would have no obligation if Article 50 lapsed. /2 

But as @IainBeggLSE and others explain here, the actual position is more nuanced than that... in truth, you would not really find out until it ended up in the International Court of Arbitration in the Hague. /3 

It has always been EU argument @MichelBarnier that “what was decided by 28 member states,has to be borne out by 28 member states right up to the end”.

i.e UK is on the hook for what it agreed in 2014 for that 7-year budget period + long term liabilities (pension etc) /4

The UK side is adamant that it never formally conceded @MichelBarnier 's point in the #brexit bill negotiations - they cite Para 96 of 2017 Joint Report to say Bill was part of package, including transition period. Not a legal obligation. /5

(There is a separate question, as to whether you could attach a rider to the Withdrawal Agreement that would make disbursement of the £39bn conditional on progress in trade talks. This seems clearer - you can't, since that's not what the deal you signed actually says). /6

But in practice, in a 'no deal' officials know that what we do pay in the event of a 'no deal' will be a political, not legal negotiation.

Which brings us to the nub.

This is about political rather than legal calculations. /7

Mr Johnson (echoing @DominicRaab @DavidDavisMP) says the net €10bn a year that the UK pays to the EU as a “great solvent and a great lubricant” in the negotiations.

The record shows the opposite. Threats to withhold cash just causes talks to grind to a halt. /8

Mr Davis the “row of the summer” over the EU’s demand that the UK settle its accounts before discussing the future relationship, but the event the row lasted less than a day and the UK capitulated. /9

Mr Johnson promises to be tougher, but as prime minister he will face the same dilemma as his predecessor: that the EU will respond by simply refusing to negotiate.

Why? /10

Because Brussels calculates that no-deal will be a great deal more painful for the UK than for the other 27 EU member states, and that, in any case, Parliament is likely to intervene to stop a ‘no deal’ if a Tory prime minister tried to push the country there. /11

It is very clear that the EU will dig in hard if the UK starts to try and re-open the sequencing question - as the reaction from France made clear. /12 

It would be seen the "equivalent" of a debt default (it's not) but member states would clearly pressure ratings agencies to downgrade. /13

The EU has also made clear it will demand full payment in event of a no deal...saying in February that if UK crashed out on Mar 2019 if would (have) expected commitment to pay by April 18, cash in account by April 30. /14 

The @theresa_may government clearly recognised the reality of this - as I reported in February.

The 'no deal' preparedness committee committed to laying the necessary statutory instruments to make payments. /15 

So we can argue over how much the UK would pay in the event of a 'no deal' - the 'historical liabilities' were highly contested I understand - but in the end, a 'no deal' will inevitably mean paying. /16

Because if we're not paying, then the EU is not negotiating, and that pipedream of a 'managed no deal' is just that.

The reality is that 'no deal' will just be a bad-tempered re-run of @DavidDavisMP 'fight of the summer' - and probably not much longer lived either. /17

Brexit has mostly been about running away from choices. No deal will confront us with them. In spades.

Bravado, on its own, will not be enough. /17 ENDS

You can follow @pmdfoster.


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