The Draft Withdrawal Agreement. The financial settlement.

A useful summary of the ‘divorce settlement’ in the Draft Withdrawal Agreement from the EU Commission’s press release  http://europa.eu/rapid/press-release_MEMO-18-6422_en.htm

“How much will the UK pay?

The objective of the negotiations was to settle all obligations that will exist on the date of the UK’s withdrawal from the European Union. Therefore, the agreement is not about the amount of the UK’s financial obligation, but about the methodology for calculating it.

Both sides agreed on an objective methodology which allows honouring all joint commitments vis-à-vis the Union budget (2014-2020), including outstanding commitments at the end of 2020 (“Reste à liquider”) and liabilities which are not matched by assets.

The UK will also continue to guarantee the loans made by the Union before its withdrawal and will receive back its share of any unused guarantees and subsequent recoveries following the triggering of the guarantees for such loans.

In addition, the UK agreed to honour all outstanding commitments of the EU Trust Funds and the Facility for Refugees in Turkey. The UK will remain party to the European Development Fund and will continue to contribute to the payments necessary to honour all commitments related to the current 11th EDF as well as the previous Funds.

How do you calculate the UK’s share?

The UK will contribute to 2019 and 2020 budget and its share will be a percentage calculated as if it had remained a Member State. For the obligations post-2020 the share will be established as a ratio between the own resources provided by the UK in the period 2014-2020 and the own resources provided by all Member States (including the UK) in the same period. This means that the British rebate is included in the UK’s share. 

How long will the UK be paying for?

The UK will be paying until the last long-term liability has been paid. The UK will not be required to pay sooner than if it had remained a member of the EU. The possibility for both sides to agree to some simplification is foreseen. 

Will the UK pay the pension liabilities of the EU civil service?

The UK will pay its share of the financing of pensions and other employee benefits accumulated by end-2020. This payment will be made when it falls due as it is the case for the remaining Member States. 

What would be the financial implications of an extension of the transition period?

During any extension of the transition period, the UK will be treated as a third country for the purposes of the future Multiannual Financial Framework as of 2021. However, extending the transition period will require a financial contribution from the UK to the EU budget which will have to be decided by the Joint Committee established for the governance of the Withdrawal Agreement.”

 

There is no reference to any payment in the event of the Backstop period.

 

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