The IEA is delighted to announce the launch of its new
Brexit Unit – set up to ensure that a strong, free market voice
is heard clearly as the UK prepares to leave the European
Union.
Brexit provides a golden opportunity to create a more flexible,
open and vibrant economy and to champion, by example, the
benefits of free trade around the world. But a positive outcome
is not guaranteed. Negotiations are ongoing and a ‘good deal’ is
far from certain; Brexit could end up resulting in more
bureaucracy and state intervention, rather than less.
Led by the IEA’s Chief Economist Jessop, the Brexit Unit will
make the intellectual case for free markets in the many debates
that lie ahead. This will include discussions of the exit terms
and the nature of our future relationship with Europe and the
rest of the world.
Should the UK pay an EU divorce bill?
Alongside its launch, the Brexit Unit has published
its first briefing on the
Brexit divorce bill, which argues that the upper limit
of this bill should be no more than £26 billion. This figure has
been reached based on the following principles:
-
The EU has made long-term financial commitments during
the period of the UK’s membership agreed by the UK and on the
assumption that the UK would continue to contribute.
-
The EU operates a budget process called the Multiannual
Financial Framework and there is therefore a case for arguing
that the UK should continue to make its usual payments until
the end of the current MMF (which runs from 2014-2020).
-
This would imply a divorce bill of around £21 billion
(net of the UK’s rebate and EU spending in the UK) covering
from March 2019 to the end of 2020.
-
There could also be a smaller one-off items on top of
this – for example pension payments contributions – which could
take the bill to around £26 billion.
Commenting on the briefing, author Jessop Chief Economist at the
Institute of Economic Affairs said:
“The Brexit negotiations will need to decide how much the UK
will pay the EU to settle financial obligations undertaken while
it was a member. Many Brits would suggest that the right figure
is in the ballpark of ‘zero’. However, some EU officials have
suggested that the bill should be north of €100bn. A
compromise towards the lower end of this range might be
acceptable – a figure of around £26 billion could be justified
using certain principles. But if the two sides fail to agree a
good deal on the terms of any future relationship, the UK can,
and should, walk away without paying a penny.”
Commenting on the launch of the Brexit Unit, Jessop Chief Economist at the
Institute of Economic Affairs said:
“The negotiations over the terms of the UK’s departure from
the EU have only just begun and there is still a lot to play for.
The IEA’s new Brexit Unit will make positive and constructive
contributions – with an emphasis on free market solutions. I am
delighted to have the chance to lead this work at such a crucial
time.”
Notes to editors
The IEA’s Brexit Unit will be launched tonight at a
reception held at Institute of Economic Affairs’ offices: 2 Lord
North Street, London, SW1P 3LB from 6.30pm, with a keynote speech
from Gerard Lyons, former Chief Economic Adviser to .
To download a copy of the Brexit Unit’s first briefing,
‘Should the UK pay an EU divorce bill?’ please
click here.
