Deal or no deal, the UK should honour its financial obligations, says Lords EU Committee report

Wednesday, 23 October 2019 10:05

There would be serious implications for future negotiations with the EU and the UK’s wider reputation if the UK did not honour the terms of the financial settlement contained within the Withdrawal Agreement. While it would be difficult to enforce the UK’s financial obligations in any international court or tribunal, the Committee notes that this does not mean that such obligations do not exist. The Committee welcomes Government statements that the UK will always “pay...Request free trial

While it would be difficult to enforce the UK’s financial obligations in any international court or tribunal, the Committee notes that this does not mean that such obligations do not exist. The Committee welcomes Government statements that the UK will always “pay its dues”, and highlights indications from the EU institutions that negotiations on a future relationship will not start until the UK’s financial obligations are honoured.

These are the main conclusions of the House of Lords EU Financial Affairs Sub-Committee’s report, Brexit: the financial settlement, published today.

Commenting on the report, Lord Sharkey, Chair of the Sub-Committee, said:

“When he was the Brexit Secretary, Dominic Raab told us that ‘Her Majesty’s Government and the United Kingdom always pay their dues’. Deal or no deal, the UK should honour its financial obligations.

“Seeking to revisit or disown the agreed financial settlement would have profound implications for the UK’s future relationship with the EU and its reputation more broadly.”

Other findings and conclusions from the report include:

The extensions to the Article 50 period, which have resulted in the UK continuing to make payments as a Member State, have been offset against a reduction in the size of the financial settlement, and have therefore been cost-neutral. The Office for Budget Responsibility estimates that the current extension until 31 October 2019 has reduced the financial settlement’s value to around £32.8 billion.
If the Withdrawal Agreement is ratified, the terms of the financial settlement will become binding and the UK will not be able to unilaterally withhold or delay payments. Such action would be contrary to the terms of the agreement and subject to the enforcement provisions it contains.
The greatest annual payments under the financial settlement would be made at the outset, through the UK’s participation in the EU’s annual budgets until the end of 2020. Compared to projected Government expenditure over the same period, this represents around 1% of public expenditure.