EU to present a “hefty” exit bill to the UK moments before Brexit negotiations

theresa-may-donald-tusk_

Informal meeting of EU Heads of State or Government – February 2017. From left to right: Ms Theresa MAY, UK Prime Minister; Mr Donald TUSK, President of the European Council. Shoot location: Valetta – MALTA. Shoot date: 03/02/2017. Copyright: European Union.

There’s just one month left for UK’s Prime Minister Theresa May to trigger Article 50 of the Lisbon Treaty, according to her plans, and the European Union quantifies an exit bill for the first time. European Commission President Jean-Claude Juncker has declared last week that the UK could face a “very hefty” bill for Brexit.

Speaking to the Belgian federal parliament, President Juncker warned the UK of two years of “tough negotiations ahead”, and that negotiating “cut-price or zero-cost” exit would simply be impossible. Indeed reports by the European Commission estimate that Britain could face an exit check of around 60 billion euros.

A delicate week

“It will be a tough negotiation which will take two years to agree on the exit terms”, European Commission President Jean-Claude Juncker said last week, putting extra pressure on an already delicate week. Basically at the same time when Mr. Juncker was delivering his speech at Belgium’s federal parliament, the British House of Lords was holding another day of talks concerning the Notification of Withdrawal from the European Union.

Indeed, after the British parliament’s upper chamber voted on February 8 on Article 50 of the Lisbon Treaty, the one that will give PM Theresa May the legal authority to officially start exit negotiations with the Brussels, further discussions on whether it is or is not undemocratic to amend the Article 50 bill took place last week. The House of Lords is expected to make a decision these days, and the debate is hotter than ever.

The European Commission most likely didn’t want to ease the tension, and President Juncker’s words came as a precise signal. Many saw his comments on the size of the negotiations the UK should expect ahead as direct message to British government in this delicate moment of internal debate.

“To agree on the future architecture of relations between the United Kingdom and the European Union we will need years”, President Juncker declared. The President of the European Commission, former Prime Minister of Luxembourg, also took a chance to remind the UK that the Brexit won’t be an operation at zero costs.

“Salty” operations

Mr. Juncker said the UK would indeed have to pay a high price for the commitments which it entered into while a member state, and used the French slang word “salty”, meaning expensive, or pricey, to label the transaction. “The British people have to know – they know already – that it will not be at a discount or at zero cost.

So the bill will be, to use a rather vulgar term, very salty”, he said. “It will be necessary for the British to respect commitments which they freely entered into”, President Juncker also added. Indeed some estimates on how much leaving the 28-member states bloc would cost the UK have started to circulate in the recent days.

The Financial Times last week reported that EU member states would be discussing what approach to take with the calculation of Britain’s exit bill, and that some of them would be in favour of a hard line. According to the Financial Times, Germany and Italy in particular would be in support of a European Commission plan to rule out starting trade talks with Britain until the UK gives assurances on citizens’ rights and on a multibillion-euro Brexit bill.

The main question in Brussels would be whether to present the exit bill to Britain even before any substantive negotiations on a future relationship would start, which is something that would change the face of EU-UK trade talks substantially.

60 billion check

And, even before people could start making question about the size of such a bill, Christian Kern, the Austrian Chancellor, became the first one to put the value on the Brexit operation. “The check should be around 60 billion euros, that’s what the European Commission has calculated and this will be part of the negotiations,” he told Bloomberg in Vienna on last Thursday.

“There will be a lengthy debate about the check that has to be paid by the UK, because 60 billion euros is a significant amount of money”, Mr. Kern also declared. Kern immediately tried to say that the EU shouldn’t seek to punish the British, but he also acknowledged the bill will be a hard blow for Prime Minister May’s plans. “The pledge to the British voters was that they were going to save a lot of money, and I think there will be a certain amount of disappointment or frustration if now the opposite happens”, Chancellor Kern reportedly said.

London’s reactions

Bloomberg reported that Britain’s Trade Secretary Liam Fox has called the idea of such a bill “absurd” and the government in London will make clear it won’t pay for any EU projects signed after November. Greg Swift, Theresa May’s spokesman, told reporters in London that the final figure for the UK’s Brexit bill will be up for discussion when talks formally begin.

According to Bloomberg, Mr. Swift said that sixty billion is a figure that “seems to be around”. “These are the kinds of issues that will form part of the negotiations and the process of the U.K. exiting the European Union”, Mr. Swift reportedly said. “The negotiations haven’t begun. This is an area that will be looked at as part of those negotiations.”

Initial calculations

Discussions are totally under way in Brussels over the size of the bill to be presented to Theresa May when she launches withdrawal talks but, despite EU member states are taking different approaches to the calculation of Britain’s exit bill, it looks like initial estimates are becoming more concrete after Christian Kern’s declarations.

Current reports and analyses by main European media outlets show that the sum is expected to cover the outstanding spending promises made by the UK in its EU membership era, contributions to pensions for its EU officials and other liabilities. The main point here is that simply such arguments have never been discussed before, as this is the very first time an EU member decides to withdraw from the bloc.

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