Tax and Fiscal Policy

Divorce Bill must be conditional on a good deal


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Government and Institutions

IEA Brexit Unit responds to the news that the Brexit talks are moving to phase two

Response to reports of a Brexit divorce bill settlement

Responding to reports that the UK and the EU have agreed the principles of a financial settlement (the so-called Brexit divorce bill) Julian Jessop, Chief Economist and Head of the IEA Brexit Unit, said:

“The UK government has made a generous offer to settle financial obligations accumulated during the period of EU membership, despite the many legal uncertainties and political risks. It is crucial that it gets something in return.

“A figure of £40-50bn might be a reasonable price to pay for a smooth Brexit, including a short transitional period before the implementation of a comprehensive free trade agreement. But the full payment should therefore be conditional on a good deal being done. The UK should retain the option of walking away.

“As this is money that the UK would have had to pay anyway if it had remained a member, it should not be seen as a cost of Brexit. The UK will still be able to spend the savings from no longer having to make large annual contributions to the EU on domestic priorities.”

Further IEA Reading: The IEA Brexit Prize: A Blueprint for Britain-Openness not Isolation

Notes to Editors:

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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.

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