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It is expected that the U.K. will have to pay around £35 billion for its ongoing obligations if it leaves the EU with the currently proposed deal. I have heard both politicians and members of the public claim that in case of a No-Deal Brexit, no such payment would be required.

Is that correct? If it is not correct but the U.K. refused to pay, what would or could the EU do about it?

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    Remember that the payment is to cover the pensions of the EU’s British (former and soon-to-be former) employees. I don’t know how the schemes are set up, but if such pensions are in isolated schemes for each member state then the U.K. scheme could collapse for lack of funding leaving thousands of British citizens stripped of their retirements. Even if there is no such isolation, to leave the other 27 EU states paying for our citizens’ retirements would be shameful. Is this what Brexit stands for? Defaulting on what are clearly our financial obligations and having other countries pay our way?
    – eggyal
    Jan 5, 2019 at 9:26

2 Answers 2

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  • According to Article 50, when a member state declares the intention to leave the EU they are out after two years unless a different agreement is negotiated. This article does not give any formula to calculate a lump sum for ongoing obligations, so there would be none unless everybody agrees.
  • The remaining EU27 will have to pay for obligations which the EU28 entered. So in the case of a hard Brexit, the EU27 will be left holding the bag. They have no legal way to collect the money.

However, this would leave the UK outside the EU with no treaty. That will hurt the EU27, but it will hurt the UK more. The EU27 would enact only the rules they need to protect their citizens.

The EU27 could start to bargain. Landing rights for UK aircraft against landing rights for EU aircraft and a share of MEP pensions. Visa-free travel for UK citizens against visa-free travel for EU citizens and a share of the EDF bills. And so on.

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    @JonathanRosenne, consider what I wrote in the third paragraph. That will hurt the EU27, but it will hurt the UK more. I see it as not one-sided, but not perfectly balanced, either.
    – o.m.
    Jan 4, 2019 at 16:12
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    In case the UK refuses to pay its past commitments as a member state, why would the EU27 (or anyone else for that matter) 'start to bargain'? To put it in other words, if the UK is seen not to keep its word on past agreements, why would one expect them to honour new agreements? In that case (which is very unlikely, because the UK knows it too), the EU27 will just postpone all future agreements until the financial matter from past commitments is honoured and the UK will give in.
    – JJJ ♦
    Jan 4, 2019 at 18:25
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    @Valorum On the negative side there are 27 countries it does trade with now that could either boycott or impose punitive tariffs on the UK for trying to stiff the EU on the obligations it has previously agreed to (prior even to Brexit). Brexiteers who believe otherwise are living in a fantasy. Where will the UK find 27 new countries to trade with if it creates a reputation for not honoring it's deals ?
    – StephenG - Help Ukraine
    Jan 4, 2019 at 21:53
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    @Valorum Ultimately the EU is far less stable than the UK Another Brexiteer myth. The UK is more likely to break up (Wales, Scotland and NI have different aims than England !) and only the UK thinks going it alone makes sense in a global economy. The EU has disagreements, but it's not going to break up because the members (apart from the UK) know it's better to be part of a powerful trading block than outside it - only the UK has that disease :-). A no deal Brexit could well be the catalyst to split the UK up.
    – StephenG - Help Ukraine
    Jan 4, 2019 at 22:25
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    @Valorum The French issue was purely an internal French matter (nothing to do with the EU and certainly not a threat to EU stability). The Greek crisis was resolved by the EU, as was the more recent silliness by the Italian government with respect to it's rule breaking budget. This shows the EU can survive quite serious national issues without loosing stability. The EU has no stability issues - it's all just Brexiteer smoke and mirrors. The remarkable unity of the EU on Brexit shows how committed member states are to the EU concept.
    – StephenG - Help Ukraine
    Jan 5, 2019 at 9:55
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Yes

While the current arrangement as part of the withdrawal deal is contingent on the UK/EU agreeing the whole of that deal, it is unlikely that the UK can complete Brexit with no payments made to the EU even under a no deal scenario.

This FT article suggests that the careful phrasing used by the PM Theresa May and the then Brexit Secretary Dominic Raab means that the UK will pay the EU the agreed liabilities, but will not do so on the schedule agreed during the Brexit negotiations.

What’s pretty much inconceivable is that the UK would use “no deal” to pay nothing to Brussels at all. Doubtless, the UK government could find lawyers to defend such a position in the event of no deal. But that would add one more nail to the coffin of the EU-UK relationship (on top, of course, of the economic catastrophe of no deal itself). It would set back even further the moment when the UK and EU could patch up the relationship. And paying nothing would do incalculable damage to the UK’s reputation as a reliable international partner.

During the negotiations the UK has accepted that it has significant liabilities in terms of monies owed to EU budgets. Using the lack of treaty enforcement to escape those payments would leave the UK with a reputation as a country that does not meet its obligations.

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    The liabilities were accepted. To then go back and say "actually all that accounting is nonsense and we're not paying" will undermine the UK government as a credible negotiator on the world stage. It will make an even bigger shambles of the whole Brexiteer Free Trade stance as no one will willingly sign up to any give/take deal with the UK again, because the UK will have shown it will not honour its agreements. It doesn't really matter if the EU negotiated in bad faith after that figure was agreed, because it was agreed, written down and signed.
    – Jontia
    Jan 4, 2019 at 19:47
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    Nothing is agreed until everything is agreed.
    – Joshua
    Jan 4, 2019 at 19:48
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    @Joshua but all this was agreed before brexit was even a thing. None of it is really to do with brexit. (I think within the Article 50 negotiations paying it over a longer time period was agreed but beyond that it was just reagreeing that we weren't going to welch on our agreements)
    – Richard Tingle
    Jan 4, 2019 at 20:36
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    It may be the Government's position that they accept the UK has significant liabilities, it is not clear on what basis this has been established and if Parliament will agree. There are researchers who believe the truth is that the EU actually owes the UK money - e.g. globalresearch.ca/eu-owes-uk-10-3k-billion-euros/5657599.
    – deep64blue
    Jan 4, 2019 at 22:07
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    This. +1. If the U.K. simply refused to pay its accepted liabilities, it would be defaulting on its debts which would cause significant concern amongst all its creditors leading to a collapse in Sterling. The U.K. could instead argue that it is not liable for those debts, but such argument should be adjudicated by an independent arbitrator such as the International Court of Justice—and it is extremely unlikely that the U.K. would win.
    – eggyal
    Jan 5, 2019 at 9:06

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