Discussions with the EU on departure

The EU is always quick to point out that there will  be discussions about the details of our departure, and these are different from the discussions about our future relationship. Some in the Commission fondly imagine they can make a meal of the former. There is even talk of presenting the UK with a large leaving bill! A few people write into this site to ask if we have to pay it. Of course we don’t.

There is nothing in the Treaty to provide for the calculation and presentation of a leaving bill. There is plenty in the Treaty to say the remaining member states need to have good relations with neighbouring countries in Europe. Presenting a big bill would be a violation of that part of the Treaty.

The truth is the UK has a share in a wide range of assets built up by the EU over the years we have been a member, including our small shareholding in the vast  bond portfolio of the ECB, our share of the many expensive properties the EU institutions own and occupy  and our share of the cash and other financial assets held by the EU. I doubt the EU will be totting them all up and wanting to send us our share. Our rights to those assets will be unenforceable once we leave.

Similarly, the EU has borrowed a lot of money whilst we have been members, to spend on itself and other countries in the Union. There is no enforceable claim on us for any part of that debt after we have gone. If they send us a bill we will tell them we will not be paying it. If I resign from a club which has borrowed money and has a  valuable club house, I immediately lose my stake in the property and end any responsibility for the debts.  If just after I left the club they sell the clubhouse and distribute some  cash to members I don’t get a share as a past member. The assets and the liabilities are assumed by the remaining members. When a new nation joins the EU it signs up to share in the present and future assets an liabilities for the duration of its membership.

Some in the EU seem to think we should be liable for the pensions of Euro officials who happen to live in the UK and are UK nationals. It is difficult to see the logic behind this. They acted as EU officials, as EU citizens, and swore an oath to the EU. No-one asked the UK to underwrite their pensions at the time they were accruing them. Surely the EU has to accept it incurred the debts and it needs to meet them. It is a pity it didn’t invest the money from the pension contributions at the time, because then there would be no future problem.

The UK will have to pay the pensions of all those UK civil servants who have been effectively working for the EU for many years putting in place all their regulations and directives in the UK. The UK promised to pay their pensions and we will keep that promise. I was pleased to see senior German politicians  now talking about how they will need a trade deal with us to keep their exports flowing. This is an early sign of some realism returning to the continental debate.

 

 

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47 Comments

  1. Mark B
    Posted January 22, 2017 at 6:13 am | Permalink

    Good morning.

    Good article and not too much to disagree with.

    We should stick to the treaties we signed in good faith. If it ain’t in the treaties, it ain’t for discussion. End of !

    I am not too happy about paying civil servants EU pensions either. I do not see the reason and they too were / are working for the EU.

    It is a pity it didn’t invest the money from the pension contributions at the time, because then there would be no future problem.

    Pot calling the kettle black on that one me thinks. 🙂

    • Hope
      Posted January 23, 2017 at 5:30 pm | Permalink

      One of May’s failings to the public who wish to leave the EU is giving a vote to both Houses of Parliament so it acts as a ball and chain to any negotiator and provides advance notice to the EU. Despite any sham assurance she gives. Her interview with Marr will go to heart of trust and the public can rightly assume she cannot be trusted.

  2. Julien Tabulazero
    Posted January 22, 2017 at 7:08 am | Permalink

    Dear Sir,

    Do you attach no value to the fact that what the EU is asking the U.K. happens to be money the U.K. has agreed and already committed to pay ? Wouldn’t Leaving without paying (filer à l’Anglaise) make of the U.K. some kind of tin pot banana constitutional monarchy and raise grave questions about its credibility.

    How do you propose leaving the EU without paying and at the same time striking the best FTA possible with it ?

    Best regards

    • Graham Wood
      Posted January 22, 2017 at 9:23 am | Permalink

      No you have it all back to front and therefore wrong. You pay to join and maintain membership of an organisation, not to leave it !

      Also, as said above – “if it’s not in the treaties……..”

      In any event the UK has been a net contributor to the parasitic EU for many years.

    • zorro
      Posted January 22, 2017 at 9:27 am | Permalink

      Of course, we have assets from our membership of and hefty contributions to th EU. These would easily outweigh any purported obligations. Why can we not leave the EU without paying a fine? Where is the legal provision for these fines? As we have proposed many times before, we can easily offer similar FTA arrangements which would benefit both sides, as it is not in EU interest economically to be punitive. If they don’t bite, then the EU through its own Treaties is required to engage positively in international trade with other nations and we can go for MFN WTO

      zorro

    • James Matthews
      Posted January 22, 2017 at 10:01 am | Permalink

      The EU’s demand for money to pay for things which are scheduled to happen after we leave, for the benefit of the remaining members, is a straightforward piece of attempted blackmail. You don’t go on paying the costs incurred by a club after you are no longer a member as you are no longer getting the benefits (e.g. a right to attend meetings, to vote and to use common assets).

      The real agenda here of course is to find a way of making the UK continue to fund the EU after it has left, so that others don’t have to.

      If the EU (an organisation which never manages to satisfy its auditors) is going to behave with all the scruples of a protection racketeer then the best possible deal is no deal.

      • zorro
        Posted January 22, 2017 at 12:59 pm | Permalink

        We should already be withdrawing funding to compensate for their forbidding our attendance at meetings.

        zorro

    • eeyore
      Posted January 22, 2017 at 10:39 am | Permalink

      This commenter highlights the melancholy truth that nations, like individuals, are prone to fall out over money. If there is a mistaken but widespread apprehension in Europe that somehow Britain owes them and is planning to renege, that in itself becomes an important factor.

      I hope he will reassure himself that Britain is an honourable nation in the habit of paying its bills. The last time we welshed was, I think, in 1672.

      • Mark B
        Posted January 22, 2017 at 4:13 pm | Permalink

        If they feel that somehow Britain; “owe’s them” then they should visit the numerous war graves and memorials to fallen British and Commonwealth troops in countless wars that they themselves created.

        It is not just treasure we have wasted on these ungrateful fools, blood too !

    • Mark B
      Posted January 22, 2017 at 10:57 am | Permalink

      If we have agreed to pay monies to the EU, and the EU has agreed to pay monies to the UK (really the UK’s money) then I see no reason why an amicable agreement cannot be reached.

      If the EU thinks we should pay ‘divorce’ money, ie monies that they have become accustomed to, then they can go and do one !

    • alan jutson
      Posted January 22, 2017 at 11:02 am | Permalink

      Julien

      Are the Eu going to continue to fund the few projects they are contributing to here after we leave, like subsidies to our farmers etc etc. ?

      No, thought not !

      It cuts both ways, suggest you read JR’s post again, we are walking away leaving our huge investment in EU Buildings, equipment, thousands of officials cars, etc etc etc.

    • ian wragg
      Posted January 22, 2017 at 11:42 am | Permalink

      As we have a £80 billion deficit in the EU’s favour, we should be discussing a fee for the EU members to continue trading with us.

    • David B
      Posted January 22, 2017 at 12:21 pm | Permalink

      We are committed to the current budget period which ends in 2019/20.

      There are no commitments beyond that date

  3. alan jutson
    Posted January 22, 2017 at 8:11 am | Permalink

    The Eu are trying on all this nonsense about payment because they want to frighten others who may be thinking of leaving at some stage in the future.
    It helps the remainers argument as well of course.

    I absolutely agree John, we simply and politely say no to any so called damages, and simply leave.
    We would be absolutely daft to make any payment if we are not getting any financial benefits of our very considerable past investments in all things EU.

    The important thing about leaving quickly is to also rid ourselves of any further bail out requirements.

  4. Ex-expat Colin
    Posted January 22, 2017 at 8:34 am | Permalink

    Fake Obligations? Trouble is the EU financial mess isn’t fake though. Rather likes Trumps press secretary we need similar to refute all the fake conditions/responsibilities carelessly bounded about.

  5. Brevity
    Posted January 22, 2017 at 8:44 am | Permalink

    The EU is too unwieldy to negotiate our leaving in proper time either for our purposes or its own. EU legislation is a must enabling the possibility of retroactively giving its blessing on bilateral agreements we will forge with EU-nation states.

    Our first suggestion to the EU should encompass the aforementioned and enact whatever ratification necessary. Time is money, for both sides.

  6. Nigl
    Posted January 22, 2017 at 9:00 am | Permalink

    We are reading a lot about potential trade deals, but until they are signed we will not know whether that is mere spin or not. As these conversations take place, you and your colleagues should place a potential value on them for the UK and trumpet that value loudly to offset the noise coming from the remoaners about the possible loss from the Single Market.

  7. Nick
    Posted January 22, 2017 at 9:52 am | Permalink

    Second observation. The French in particular want the EU to damage the EU.

    They have a track record for this. 100 years ago they were doing the same with Germany at Versailles.

    And we all know how that ended.

  8. Lifelogic
    Posted January 22, 2017 at 9:52 am | Permalink

    I agree with all that. There is no reason at all for there to be a leaving bill As to the EU pensions either the EU pay them or they do not get paid.

    The whole question of how to deal with the many hugely overgenerous state sector pensions need addressing urgently anyway. Why should people in the private sector, often with no private pensions all, be taxed to the hilt to feather bed the state sector?

    Rather worrying to see Christopher Booker’s take on Theresa May’s exit plan today, he describes it as just laughable.

    I think he is totally wrong on this issue, though he is surely sound on climate/energy and many other issues he addresses.

    • zorro
      Posted January 22, 2017 at 1:05 pm | Permalink

      Unfortunately, Mr Booker is not OK with anything unless you agree with his eay of doing things.

      zorro

    • Denis Cooper
      Posted January 22, 2017 at 1:10 pm | Permalink

      He says inter alia:

      “That “EEA/Efta option” could also have given us other advantages, including the unilateral right to impose selective control over immigration at least from within the EU.”

      This is what the Preamble to the EEA Agreement says:

      http://www.efta.int/media/documents/legal-texts/eea/the-eea-agreement/Main%20Text%20of%20the%20Agreement/EEAagreement.pdf

      “DETERMINED to provide for the fullest possible realization of the free movement of goods, persons, services and capital within the whole European Economic Area …”

      1. If UK wants the “unilateral right to impose selective control over immigration at least from within the EU”, as it does, then it cannot honestly sign up to that.

      2. If it was known to the other parties that the UK was planning to abuse a certain provision of the EEA agreement to claim a “unilateral right to impose selective control over immigration at least from within the EU”, as it would be known because they will have read all about it in Booker’s column, then they would not all agree that the UK could continue to be a member of the EEA.

    • Fairweather
      Posted January 22, 2017 at 3:32 pm | Permalink

      Wrong
      He is probably right on the economics of energy,but wrong on the science
      The Royal Society have published a layman’s report, and a 69 second video
      https://royal society.org/topics-policy/projects/climate-change-evidence-causes/

  9. Denis Cooper
    Posted January 22, 2017 at 10:56 am | Permalink

    It should be understood that we are not expected to hand over this money because we are leaving the EU but because we joined in the first place, and agreed that the organisation would not only spend what it had in any year but also enter into substantial commitments for future years. If we stayed in the EU we would be handing over this money, and more besides, year after year to help the EU meet those agreed future commitments.

    The only possible differences are:

    a) They seem to expect it all to be paid in an upfront lump sum, presumably because they do not trust us to pay it over as it is required over the coming years;

    b) They seem to be searching for ways to inflate the total sum due.

    I don’t see why they should expect the negotiations on this to be the top priority, it seems to me to be a subsidiary matter which can be dealt with by accountants on both sides in parallel to the negotiations of more important negotiations such as trade. It does give the impression that they don’t trust us and want to get the cash before anything else.

  10. alastair harris
    Posted January 22, 2017 at 11:06 am | Permalink

    It was good to see our prime minister set out a pragmatic approach to brexit, and to hear some encouraging responses from some in national governments. I guess that as more details emerge we will see diminishing hot air on this subject.

  11. Colin Hart
    Posted January 22, 2017 at 11:19 am | Permalink

    The Germans may be a lot of things. But they are not stupid.

  12. fedupsoutherner
    Posted January 22, 2017 at 11:29 am | Permalink

    I see Nick Clegg on Andrew Marr this morning is still going on and complaining about everything. He seemed to indicate that even if they did not vote against Brexit now he wouldn’t rule out anything further down the line when the final plans are made public. Disgraceful. It has taken hundreds of years for the people of this country to get a say and now the rich and powerful seem to think they can take democracy from the people.

    • alan jutson
      Posted January 22, 2017 at 8:00 pm | Permalink

      Fedupsoutherner

      Clegg on Marr also seems to be under the impression (to suit his figures) that leaving the single market means all exports to the EU from the UK will drop to absolutely Zero, but thdeirs to us will continue as before.

      The man is an absolute fool, or he thinks we are.
      We will still export to the EU, the deal eventually reached will simply determine by how much this trade will continue.

      Why do presenters let him and his type get away with such tripe.

  13. Antisthenes
    Posted January 22, 2017 at 11:30 am | Permalink

    No doubt there is going to be considerable wrangling about assets and liabilities as part of the deal to end the UK’s membership of the EU. You point out the rational and logical approach in dealing with them and us Brits of course would concur. However Brussels and others in the EU will will have a different understanding and will do everything to ensure their version prevails. This will result in a stalemate that can only be resolved either by the party whose threats carry the greatest weight or by arbitration. Neither fills me with optimism as the UK will be in direct conflict with 27 other states almost half a continent and the ability of the judiciary to come to fair and reasonable judgement is very doubtful if past experiences are any guide.

    Deja vu perhaps as 1940 comes to mind when the UK stood alone against half a continent but in the end prevailed. The modern day progressive thinking of the judiciary is another matter as that will automatically make them sympathetic to the EU. Hopefully the Brexit ministers have in their ranks some with the abilities of Churchill and Lord Denning.

  14. Sue Doughty
    Posted January 22, 2017 at 1:16 pm | Permalink

    It is very simple. We trigger Article 50 at the end of March 2017 and stop making payments at the end of March 2019. After that date tariffs must be imposed on imports from the EU at WTO rates unless the EU has asked for and agreed something else.
    Making a meal of that would be hard, no starters, no pudding and they pick up the tab.

  15. Malcolm Lidierth
    Posted January 22, 2017 at 1:50 pm | Permalink

    On Twitter, some of the 40+ Labour MPs who have written to the PM have told me I should read their letter. I have.
    They seem less keen on replying to the question of why being “the most sophisticated trading block in the world”, as the letter implies, is a virtue. Didn’t sophistication in financial transactions contribute to the 2008 collapse?
    I wonder how many of the 40+ MPs have read their letter.

  16. English Pensioner
    Posted January 22, 2017 at 1:51 pm | Permalink

    In my view, we should have stopped paying when they failed to provide any fully audited accounts.
    I pay a subscription to a club, and the accounts are presented each year for the AGM, and I certainly wouldn’t agree to any increase in subs if they’d not been properly verified. So why did the UK continue to pay up and pay increases under circumstances which a private individual wouldn’t tolerate with any organisation which they paid for personally?

    • turboterrier
      Posted January 22, 2017 at 10:38 pm | Permalink

      @ English Pensioner

      Absolutely correct. The whole concept is totally crooked. how the hell can a business provide budgets for the next year not knowing that the previous years undertakings are sound.

  17. The Prangwizard
    Posted January 22, 2017 at 1:59 pm | Permalink

    Let’s hope the trade deals we hear so much about are not just a much easier method for others to sell us more of their stuff. I fear our negotiators may not be tough enough to prevent this.

    I also worry that since our industries have been diminished so much over recent decades and foreigners own much of what is left and taken other parts with them we may not make enough to sell to them, so our trade deficit will continue to rise.

    Governments have connived in stupidly throwing away our GEC’s and ICI’s and hundreds of others.

    • old salt
      Posted January 22, 2017 at 10:47 pm | Permalink

      Is it not called “inward investment” which, as said, has been actively encouraged and where do the profits go? further enlarging our deficit. Should we not be “investing” more abroad? I guess it’s the market – stupid – as they say.

  18. ian
    Posted January 22, 2017 at 2:20 pm | Permalink

    From what i have read about talk on leaving, they are not going to take place till march 2019 because the eu is booked up till then also they want to put your contribution up by 4.5 billion a year this year till you leave which will not happen till oct 2019 so the con party can get ready for a election in 2020 and as they keep telling you all, mays new ideas will not take place till you leave the eu and you will fine them all in the con party manifesto in 2020, now you might ask why they are not starting build for future now that because the voters like sweet talking promise like the ones you have seen over last 7 years which translate in to more cuts and the money coming from leaving the eu has already been spoken for, hospital and care, if they have no money to do anything now it will be same in 2020 unless there are going to be changes to the tax system.

  19. John S
    Posted January 22, 2017 at 3:58 pm | Permalink

    I have read articles by Christopher Booker, including one today, in which he states that it is going to be very difficult to extricate ourselves from the EU and that Theresa May’s simplistic position is mad. He believes the only viable option is to go for a Norway type of agreement. This leaves me confused. I am sure you read his articles and would be obliged if you could refute his assertions head on.

    • Kamara
      Posted January 23, 2017 at 6:20 am | Permalink

      I would also be interested in Mr Redwood’s view on Mr Booker’s analysis. Mr Booker makes clear that without a move to the EEA, or at least something very like it, then on Brexit day, the UK’s economy literally grinds to a halt because our exporters will no longer have EU-recognised paperwork. LIke Sir Ivan Rogers, Mr Booker thinks it will take ten years or more to try to map out a deal

  20. NickC
    Posted January 22, 2017 at 4:22 pm | Permalink

    The more we “negotiate” with the EU, the worse the outcome (for us).

    • Graham Wood
      Posted January 22, 2017 at 7:08 pm | Permalink

      Nick C Absolutely right. How many more times does it need to be said, (as our host has affirmed on this blog more than once) The UK does NOT need to negotiate to leave the EU – we leave first and then invite the EU to offer full and free conversations on possible trade deals they may wish to settle.

  21. Martin C
    Posted January 22, 2017 at 9:14 pm | Permalink

    I thinknin all fairness we should repatriate the pensions of British citizens employed by the EU. However, thesevpensions must be paid according to British pension law and tax rules. Pension pots worth in excess of £1m will be taxed at 55% off the top, and income from those pensions will be subject to British income taxes.
    The current scheme where EU officials pay a 21% flat rate tax with no cap on the max amount, we must not honour at all.

  22. turboterrier
    Posted January 22, 2017 at 10:52 pm | Permalink

    Why are we even bothering to put up with all this s***. Just repeal the 1972 legislation and walk away. The EU is so desperate for money and our leaving will be a financial disaster for them. Like a lot of the UK population I really pray that others will follow our lead this year and the whole gambit falls like a house of cards. They have had more than enough money from us, and some over the years

  23. Lindsay McDougall
    Posted January 23, 2017 at 1:44 am | Permalink

    Dear President (whichever) ……………………………………………….. 31st March 2017

    The United Kingdom hereby gives notice that it will leave the European Union on 31st March 2019 at the latest, come Hell or high water.

    We aim for maximum recovery of sovereignty, minimum residual financial contribution, and maximum free trade.

    We shall make two further net contributions (gross minus rebate) to the European Commission, as follows:
    – A full year’s contribution of approximately £14 billion on 1st January 2018
    – A quarter year’s contribution of approximately £3.5 billion on 1st January 2019

    We shall implement trade deals with other non-EU State from 1st April 2019 onwards.

    We shall reclaim our fishing grounds and fishing rights in full from 1sr April 2019 onwards, with enforcement by the Royal Navy if necessary.

    We shall exit from the Common Agricultural Policy.

    We shall retain zero tariffs and zero non-tariff barriers on EU goods and services imported by the UK for the first year after exit. The EU will be given a grace period of one year to follow suit. If the EU-27 choose to impose tariff or non-tariff barriers on UK goods and services after that year is up, we shall meet unto them the measure – yes, and more than the measure – that they have meeted unto us.

    The only circumstance in which the UK will make an additional payment to the EC will be if we are permitted to start implemening trade deals (e.g. with America, Australia) well before 1st April 2019.

    Yours etc.

    Theresa May

    That ought to do it. There’s not much renegotiation left.

  24. David Cockburn
    Posted January 23, 2017 at 8:53 am | Permalink

    Lord Nelson said that Britons should never negotiate with the French as we always lose, and it is the French who will be running the EU side of the negotiations.

  25. Juliet
    Posted January 23, 2017 at 3:46 pm | Permalink

    EU says it the best company in the world, even the best companies I rate as world best have audited accounts and transparency.

    Dont get it Leaving Bill is like going to a restaurant tasting a really bad uninspired meal and being told to pay for the other patrons meals even though you refuse to pay for your own and vowed to never return

  26. Mike Wilson
    Posted January 23, 2017 at 6:14 pm | Permalink

    I think we should indulge in a game of ‘Call my Bluff’. The EU says it won’t talk about anything until we invoke Article 50. Why they won’t seems daft to me. If someone says to me ‘I’m thinking of handing in my notice’ it gives me the chance to say ‘can we talk about this before you do it?’ But that is not the EU way.

    We should invoke Article 50 and say we don’t actually want to talk about anything – that we will simply leave in two years’ time. That gives us two years to get other trade deals ready to sign and go, and two years for business to prepare for tariffs.

  27. Tim Gibbs
    Posted January 31, 2017 at 8:23 pm | Permalink

    Have you ever met a person or negotiated anything? Amazingly straight ultimatums don’t work well, especially when you have few viable alternatives. The EU are in the box seat, we don’t have a massive market for our Nissans etc, whereas quite a few other countries enjoy prosecco and French cheese, including quite a few inside the EU. And don’t expect financial services to help out; as we were told ad nauseam during the financial crisis, capital is highly mobile and New York is already benefiting from our idiocy. As our currency continues to collapse we may find it hard to afford much in the future, especially when tariffs are added. Less trade will mean lower prosperity, and all because people outside the cities don’t like immigrants and are credulous of Alice in wonderland promises…

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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