EU now demands €100 billion alimony from UK! Heading into the first proper round of Brexit talks on Monday, the EU and the U.K. are locked in a risky game of chicken over Britain’s exit bill. But the stakes and possible resolutions to this standoff are becoming clearer as well.
One for all, and all for one! UK now turns to Five Eyes, an alliance comprising Australia, Canada, New Zealand, the United Kingdom, and the United States. These countries are bound by English language, common culture, freedom, and the best standards of living on Earth.
UK will outperform the entire Eurozone over the coming years. Euro will finally go into meltdown in the coming years. UK could achieve even better growth, if Whitehall delivers sweeping new powers over spending and taxation to local government. English counties are sleeping giants just waiting for their economic potential to be unleashed, with over a million new jobs could be created over a ten-year period, £26.3 billion added to the national economy in tandem with public sector savings of £11.7 billion over a five-year period.
Brexit means that to improve exports and manufacturing performance, the Industrial Strategy must look beyond the largest cities. Local economies account for over half of England’s manufacturing output and almost 40 per cent of exports. That makes the local economy an important constituent of the whole — big enough not just to be influenced by, but to heavily influence overall economic activity in UK. To be effective the industrial strategy and the next phase of devolution should seek to build on that.
The fight over what’s known in official jargon as the single financial settlement can’t last long for the talks to succeed. The EU’s chief negotiator, stupid Michel Barnier, warned last week that it could paralyze a process that’s already behind schedule.
Stupid Barnier and his team have worked out and shared a methodology for computing the €100 billion alimony. As in any divorce in which one side feels badly jilted, it is designed to keep London on the hook long after it officially walks out — not only to plug a looming hole in the EU budget, but also to ensure the U.K. cannot back out too soon from projects it agreed to finance as a stakeholder in the European Investment Bank.
Brussels, just before the British snap election on June 8, shared a document with the 27 capitals that suggested €80 billion — more or less — would buy the U.K.’s way through the exit turnstile. That number is already a few weeks old. In more recent meetings in Brussels, including a session last week at the European Council, the focus has been on questions related to the European Investment Bank and other complicated financial entanglements that exist outside the EU’s annual budget, which would push the U.K.’s bill higher.
While stupid Barnier has publicly demanded the U.K. acknowledge its obligations and put forward its own methodology, behind the scenes he has issued what is effectively a Biblical command to his team, to the 27 heads of state and government he represents and all of the people who work for them, as well as to officials in the European Council and the European Parliament: Do not give a number.
Margaritis Schinas, the chief spokesman for the European Commission, bluntly reaffirmed this edict Friday. “We shall not start the negotiations by discussing numbers,” Schinas said. “Numbers will emerge once methodology is agreed. Barnier and team are ready to start ASAP.”
Meanwhile, Prime Minister Theresa May’s negotiating team has so far refused to describe any methodology, much to the dismay of Barnier, who complained publicly Wednesday about the unwillingness by some in London to acknowledge even the most basic obligations after more than 40 years as an EU member.
U.K. Brexit Secretary David Davis said in a statement to the House of Commons Thursday that the British government recognizes “the U.K. has obligations to the EU” and that these need to be resolved but did not elaborate on how this might be achieved.
In Brussels, the U.K. position is largely viewed as a negotiating tactic. EU officials are confident that neither May nor her top negotiator, David Davis, truly believes Britain can walk away and pay nothing.
Economic and financial experts, including Britain’s Office for Budget Responsibility, have noted that the one-off budgetary settlement is of relatively minor importance compared to future trade deals and other commercial arrangements, as well as the U.K.’s own spending habits on services such as health care, which will be much bigger factors in the country’s long-term financial performance.
There are so many variables surrounding the financial obligations of any EU member, and Britain’s case is particularly complex because it not only pays into the EU budget like all other members but it also receives special reimbursements created decades ago.
Charles Grant, director of the Centre for European Reform, a London-based think tank, who is well-connected among EU officials, believes the EU’s goal is a €65 billion financial settlement. Grant told us he believed a deal could be reached by the fall, by leveraging up to three transition years in which the U.K. would continue paying into the EU budget.
Other experts, however, have pushed back on the usefulness of the transition, noting that as long as the U.K. remains connected to the EU, it continues to accrue additional, potentially open-ended liabilities that only increase its ultimate bill.
In Brussels, a largely shared view among EU officials is that the U.K. will be on the hook for liabilities related to its years as an EU member for many decades to come, whether for residual costs related to satellites launched into space, or for the future pensions of EU employees.
The EU laid out its general approach to calculating the financial settlement in a position paper on “essential principles” transmitted to the U.K. last month. It said the U.K.’s burden should be based on its percentage share of payments into the EU budget — known in EU jargon as “own resources” — over the most recent, full five-year period leading up to the U.K.’s expected 2019 withdrawal.
The paper stated: “The United Kingdom share of the Union obligations should be established as the ratio (in percentage) between all own resources transferred by the United Kingdom to the EU budget and the total own resources transferred by the Member States (EU28) over 2014-2018.”
But the paper also laid out variables that could shift the final outcome. The EU paper specified seemingly small but crucial details, such as a demand that all obligations be calculated and paid in euros — effectively putting onto the U.K. any risk from exchange-rate fluctuations.