National Audit Office warns UK’s Brexit divorce bill could exceed cost estimates

National Audit Office warns Brexit divorce bill could exceed cost estimates
UK Prime Minister Theresa May © Aron Urb (EU2017EE)

The UK’s National Audit Office (NAO) has warned that the cost of the country’s Brexit divorce bill could be billions higher than an estimate by Prime Minister Theresa May.

In December, May offered the figure of £35-39bn (~€40-44.5bn) as a maximum amount for the Brexit divorce bill – that is, the amount of money that the UK would owe to the EU to fulfil its current financial commitment following Brexit.

This amount was agreed following Brexit negotiations and is far lower than the previously touted figure, which suggested that UK financial commitments to the EU could exceed £100bn. However, it has already proved controversial among some Eurosceptic MPs, who have disputed whether the UK should owe any money to the EU at all following Brexit, The Guardian reports.

Why has the NAO warned of higher costs?

Now, the National Audit Office has undertaken its own cost estimate, and warned that the UK could owe an additional £3bn in budget contributions and almost the same amount in contributions to the European Development Fund, commitments which were not taken into account in the government’s estimate.

This is in part because the UK’s contributions to the EU annual budget would be calculated based on the country’s economic prospects for 2019 and 2020, and this would determine Britain’s outstanding commitments once the country leaves the bloc.

What did the NAO say?

In a statement revealing its findings, the NAO explained: “The terms of the settlement, which mark 31 December 2020 as a key date for determining the UK’s share of liabilities, mean the EU commission could skew future decisions and impact the total value the UK will have to pay back.”

Other factors which may not have been taken into account in the government’s estimate include Britain’s obligations to the EU pension scheme. Under the current agreement, the UK’s contributions would last until 2064, but the country could choose to pay it off early in a lump sum. However, this would also impact the total amount of money the UK would need to pay in its Brexit divorce bill.

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