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UK will be paying Brexit 'divorce bill' until 2064, says Treasury watchdog UK will be paying Brexit 'divorce bill' until 2064, says Treasury watchdog
(35 minutes later)
Britain will be paying its Brexit “divorce bill” until 2064, the Treasury watchdog says – 45 years after departure day.Britain will be paying its Brexit “divorce bill” until 2064, the Treasury watchdog says – 45 years after departure day.
The Office for Budget Responsibility puts the cost of the financial settlement with Brussels at £37.1bn, in line with the figure quoted by Theresa May.The Office for Budget Responsibility puts the cost of the financial settlement with Brussels at £37.1bn, in line with the figure quoted by Theresa May.
For the first time, the OBR estimates how long Britain will be settling it debts, suggesting the bill will not be paid in full until 2064.For the first time, the OBR estimates how long Britain will be settling it debts, suggesting the bill will not be paid in full until 2064.
And it says more will be paid out each year than Britain recoups in realising its share of assets from membership from 2030 and for the following 34 years. The watchdog adds more will be paid out each year than Britain recoups in realising its share of assets from membership from 2030 and for the following 34 years.
Although the annual payments are small from the middle of the next decade, the scenario is likely to anger some Brexiteers, not least because they are largely to fund the pensions of EU officials.Although the annual payments are small from the middle of the next decade, the scenario is likely to anger some Brexiteers, not least because they are largely to fund the pensions of EU officials.
In its verdict on the Spring Statement, the OBR said it still lacked a “meaningful basis to predict the precise outcome of the current negotiations with the EU”.In its verdict on the Spring Statement, the OBR said it still lacked a “meaningful basis to predict the precise outcome of the current negotiations with the EU”.
Despite the Chancellor’s claim of “substantial progress” in the negotiations, it was forced to make “broad-brush assumptions about the economy and public finances after the UK’s exit from the EU”. Despite the Chancellor’s claim of “substantial progress” in the negotiations, it was forced to make “broadbrush assumptions about the economy and public finances after the UK’s exit from the EU”.
The OBR said Britain’s bill would be a total of £16.4bn in 2019 and 2020, as it continued to pay into EU budgets “as if it had remained in the EU”.The OBR said Britain’s bill would be a total of £16.4bn in 2019 and 2020, as it continued to pay into EU budgets “as if it had remained in the EU”.
After that, outstanding commitments would total £18.2bn between 2021 and 2028 – including around £7.5bn in 2021 alone - casting fresh doubt claims of a “Brexit dividend” to be spent on the NHS, for example. After that, outstanding commitments would total £18.2bn between 2021 and 2028 – including around £7.5bn in 2021 alone – casting fresh doubt claims of a “Brexit dividend” to be spent on the NHS, for example.
Although annual payments would fall sharply from around £3bn in 2023, they would continue for a further four decades, with around £500m still owed in the final year.Although annual payments would fall sharply from around £3bn in 2023, they would continue for a further four decades, with around £500m still owed in the final year.
As well as pensions, there would also be costs for agriculture, for development projects in deprived areas of the EU, for the EU’s aid budget and for science and education programmes.As well as pensions, there would also be costs for agriculture, for development projects in deprived areas of the EU, for the EU’s aid budget and for science and education programmes.
The watchdog’s report also stated: “The Bank of England has estimated that Brexit uncertainty has directly lowered business investment by 3 to 4 per cent."The watchdog’s report also stated: “The Bank of England has estimated that Brexit uncertainty has directly lowered business investment by 3 to 4 per cent."
And, in a further warning of the price of withdrawal, it said: “The adjustment to a new trading regime after Brexit may render some parts of the nation’s capital stock obsolete." And, in a further warning of the price of withdrawal, it said: “The adjustment to a new trading regime after Brexit may render some parts of the nation’s capital stock obsolete.”
A Treasury spokesman explained the Government could be able to pay down its liabilities earlier, but argued it would be better to spread the cost over a longer period to lower the impact on the public purse in any one year.A Treasury spokesman explained the Government could be able to pay down its liabilities earlier, but argued it would be better to spread the cost over a longer period to lower the impact on the public purse in any one year.
He also suggested that maintaining some liabilities was an important “negotiating principle”; as the UK seeks to hammer out details of its trading relationship with the EU in coming years. He also suggested that maintaining some liabilities was an important “negotiating principle”, as the UK seeks to hammer out details of its trading relationship with the EU in coming years.
The spokesman said: “We want to pay our bills when they are due. If you think about your own finances, you don’t want to pay the bill before it’s due because we’d rather invest that money today.The spokesman said: “We want to pay our bills when they are due. If you think about your own finances, you don’t want to pay the bill before it’s due because we’d rather invest that money today.
“So we have an option to bring it forward if we choose that it is in our interest – but actually it is an important negotiating principle for the UK.”“So we have an option to bring it forward if we choose that it is in our interest – but actually it is an important negotiating principle for the UK.”