According to a new House of Lords analysis, Britain would not be legally bound to contribute towards the European Union’s budget if no exit deal is reached.
The calculations of so called “divorce bill” from the EU are “hugely speculative” and almost every element is subject to interpretation. Michel Barnier, the European Commission’s chief Brexit negotiator, has reportedly placed such a bill close to €60bn (£52bn).
Brexit Secretary, said earlier this year that the Government would not rule out making future payments to the EU’s budget in order to secure favourable access to Europe’s markets.
Chancellor Philip Hammond was of the view that Mr Davis was “absolutely right not to rule out the possibility that we might want to contribute in some way to some form of mechanism”.
But Theresa May warned her European allies that the UK is prepared to crash out of the EU if no reasonable Brexit deal is agreed on. In this case, the Lords add, Britain will not be liable to make any further financial contributions to the budget.
It was also reported that such a “disorderly exit” would create a legal and political void and that both sides – Britain and the EU – should recognize the gravity of a no-deal.
“An inability to reach an agreement on the budget will undermine the Government’s aim to negotiate market access on favourable terms,” the authors added.
The chair of the Lords committee Baroness Falkner of Margravine said “Even though we consider that the UK will not be legally obliged to pay in to the EU budget after Brexit, the issue will be a prominent factor in withdrawal negotiations. The Government will have to set the financial and political costs of making such payments against potential gains from other elements of the negotiations.”