The financial cost to the UK of leaving the EU

The financial cost to the UK of leaving the EU

By Michael Waibel, Faculty of Law, University of Cambridge

Post-Brexit options for the UK: combining legal and economic analysis

The UK’s Liability for Financial Obligations Arising out of Its EU Membership

Continuing the CBR’s series of themed podcasts and blogs on the Post-Brexit Options for the UK: Michael Waibel, Senior Lecturer in the Faculty of Law at the University of Cambridge talks to Boni Sones about the direct financial cost to the UK of leaving the EU.

Waibel’s paper is called: The UK’s Liability for Financial Obligations Arising out of Its EU Membership. It can be downloaded at the bottom of this audio podcast.

The Prime Minister, Theresa May has now triggered article 50 which gives the UK two years to negotiate its exit from the EU and to determine the terms on which it will leave. There has been much speculation about the exit bill with estimates ranging from 60 billion Euros to nothing.

A report published in March 2017 by the House of Lords concluded that the UK could leave the EU without being liable for outstanding financial obligations under the EU budget and related financial instruments, unless a withdrawal agreement is concluded which resolves this issue. It goes on to say that the jurisdiction of CJEU (Court of Justice of the European Union) over the UK would also come to an end when the EU Treaties cease to have effect. Outstanding payments could not, therefore, be enforced against the UK in the CJEU.

Michael Waibel tells Sones that both these conclusions of the House of Lords are likely erroneous. He believes the UK is liable in principle for a share of the EU’s budget commitments and pensions of EU officials and that the Court of Justice may well have jurisdiction over the UK’s financial obligations arising out of the UK’s membership in the EU.

Waibel key quotes:

  • “The House of Lords’ assessment as a backdrop to these Brexit negotiations is that there is no legal liability. In purely legal terms I think the House of Lords has got it wrong. The UK is in principle liable for a share of the EU’s budget commitments that the UK made as a member of the EU. There is a seven year budget process and commitments have already been made up to 2020 and it is primarily those commitments that will be the subject of negotiations.“
  • “Aa a matter of principle and that is what Article 50 itself says, the Treaties continue to apply to the member state that has given notice of its intention to withdraw until the critical date, that is when the EU membership of the withdrawing state actually ceases and that is prospectively going to be 29th March 2019 or other agreed date between the EU 27 states and the UK. Up until that point the Treaty obligations under the European Treaties apply to the UK in full and so does the jurisdiction of the European Court of Justice.
  • “I think both sides have an interest in resolving this matter of the UK’s financial obligations through negotiations given the uncertainty that surrounds their scope. The principle of liability is quite firmly established. If for whatever reason the European Courts do not resolve this matter or they lack jurisdiction there may be other options such as going to the International Court of Justice in the Hague. I don’t think this is something the 27 EU states would want to do – they would want to negotiate a settlement.”
  • “I would hope there is a settlement between the two sides, I think it will be less than the 60 Billion Euros the European Commission has floated but I think if the UK considers its priorities in these negotiations it will hopefully realise that the financial aspect of these negotiations are not in fact such a high priority. It’s about 1.5 billion a year for the UK’s membership over the last 45 years so I hope there is room for a compromise. If the UK refuses to move it could be a stumbling block for the broader negotiations.”

You can download and read here the Blog by Michael Waibel on The UK’s Liability for Financial Obligations Arising out of Its EU Membership (put pdf attachment here).

Waibel The UK’s Liability for Financial Obligations Arising out of Its EU Membership


Listen to the podcast

Continuing the CBR’s series of themed podcasts and blogs on the Post-Brexit Options for the UK: Michael Waibel, Senior Lecturer in the Faculty of Law at the University of Cambridge talks to Boni Sones about the direct financial cost to the UK of leaving the EU. 

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