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UK to Pay €20 Billion for Brexit

Thursday, 13 October 2016 16:35

The United Kingdom is facing the “divorce” bill from the EU as much as €20 billion, according to Financial Times analysis, Vesti Ekomomika reports.

Therefore, the total budget of Eurozone can become one of the most serious political obstacles for Brexit.

More than 300 bln of debt liabilities should be paid during the settlement for Brexit. This is the legacy of joint financial liabilities for several decades – from pension contributions to multiannual contracts on performance of obligations for financing infrastructure projects. Brussels will surely insist upon observance of these obligations by the UK.

The high value of upper estimate of liabilities of the UK to Eurozone, which some of 27 EU members find to be very low, may damage and disrupt Brexit, as some European officials believe.

The upper estimate, equaling to 20 billion euros, covers UK’s share in long-term liabilities, including unpaid budgetary appropriations, amounting to EUR 241 bln, pension liabilities, amounting to 63.8 bln, and future contractual and other expenditure obligations for the total amount of nearly EUR 32 bln.

The British eurosceptics will likely be unsatisfied that UK taxpayers will have with high probability to pay billions pounds to Europe as the price for Brexit. One of the ministers stated that they need to carefully explain to people why we need to pay to have access to single market.

Brexit will make a hole in EU budget and potentially risks to create delayed political consequences. Germany, Italy, France and other clean donors will try to solve problems, associated with EU budget holes, and will have to scrap some programs, which Brussels and countries of Eastern and Central Europe consider as the legally binding pledges.

UK’s payment, amounting to EUR 20 bln, will cover only expenses for already approved projects on the territory of 27 EU countries, but not the future deficit, which will be created after 2019 due to Brexit from EU long-term budget. 

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