17 May 2017

ICAEW: Analysing the EU Exit Charge

Using the EU’s 2015 accounts, ICAEW outlined the potential bill due in March 2019 with three potential scenarios - high, low, and a more likely central scenario - once the rebate and money returning to the UK is accounted for.

• Potential exit charges range from a low cost of £5bn to a maximum cost of £30bn, with the central scenario cost £15bn (based on an exchange rate of €1.20 to £1) - equivalent to £225 per person expected to be living in the UK in 2019.
• Currently the UK’s share of the EU budget each year is approximately £20-£21bn, before an estimated rebate of £5-6bn, and spending returning to the UK of £6- £7bn.
• While the estimated rebate is expected, the EU could attempt to withhold this if there is no agreement on wider exit charges.
• Liabilities include EU staff pension and sickness payments which will be close to £63bn when the UK leaves, and of which the UK’s share is £10bn. This could be a one-off settlement or the UK could agree to contribute £0.2bn a year for the next 50 years or so.
• The value of the EU’s fixed assets will also need to be determined.
• Additional areas for negotiation include the European Investment Bank (EIB), of which the UK has a 16% share. As ownership of the EIB is restricted to EU members, the UK may need to sell its stake to other EU members, or existing rules may need to change.
• The EU is likely to argue that costs incurred caused by the UK’s decision to leave should be paid for by the UK rather than by other member states.

Full report

© ICAEW - Institute of Chartered Accountants in England and Wales