Brexit deal struck, but at a huge cost

  • 09/12/2017
Brexit will cost the UK billions. Photo credit: Getty

Britain estimates the ultimate cost of meeting its financial obligations to the European Union on Brexit at €40 to €45 billion, a senior UK source says.

"We expect the range to be between £35 and 39 billion," the spokesman said. "We would look at it as a fair settlement of our obligations."

The size of the so-called "divorce bill" emerged after European Commission president Jean-Claude Juncker announced on Friday that he is recommending leaders of the remaining 27 EU states give a green light to the start of trade talks next Thursday.

The breakthrough was hailed by UK Prime Minister Theresa May as "a hard-won agreement in all our interests", while Mr Juncker said it represented "sufficient progress" for negotiations to move on to their second phase.

In dramatic pre-dawn scenes, Ms May and Brexit Secretary David Davis flew to Brussels to confirm with Mr Juncker the text of a joint document setting out proposals on the key divorce issues of citizens' rights, the Irish border and Britain's exit bill.

Deadline set

Britain's withdrawal agreement from the EU must be ready by October, the bloc's Brexit negotiator Michel Barnier says.

"We will need to have the final version of the withdrawal agreement ready by October 2018, in less than one year," Mr Barnier told a news conference on Friday.

Mr Barnier said he was satisfied with the agreement between the EU and Britain that no EU country, including Britain, would have to pay more or receive less as a result of Britain's decision to leave the bloc in 2019.

He repeated the words of Ms May that no EU country, including Britain, would have to pay more or receive less as a result of Brexit.

"The UK will honour all the commitments entered into during its EU membership."

What's in the Brexit divorce deal?


Refers to British citizens, including spouses and children, living in an EU state and other EU nationals living in Britain on date of its withdrawal. It does specify whether British citizens may move from one EU state to another and retain the same rights.

Citizens with permanent residence documents should get new ones free of charge and can be absent for up to five years without losing their rights.

Equal treatment will cover rights with respect to social security, health care, employment and education.

The European Court of Justice (CJEU) is the ultimate arbiter of EU law. The agreement states that "UK courts shall therefore have due regard to relevant decisions of the CJEU".

EU and Britain have agree to set up a mechanism enabling UK courts to ask the CJEU to weigh in when necessary during an eight-year period following Brexit.


Britain promises to preserve the integrity of its own internal market and Northern Ireland's place within it.

It says it does not want a hard border between Ireland and Northern Ireland, saying it aims to avoid checks and controls there via a future EU-UK economic relationship.

If this is not possible, Britain says it will propose "specific solutions to address the unique circumstances".

In the absence of such solutions, Britain will "maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South co-operation, the all-island economy and the protection of the 1998 (Good Friday peace) Agreement".

It pledges to ensure there are "no new regulatory barriers" and "unfettered access" for Northern Ireland's businesses to the rest of Britain.

Both parties acknowledge 1998 agreement recognises birth right of all people of Northern Ireland to be Irish, British or both.


"Both parties have agreed a methodology for the financial settlement... drawn up and paid in euro."

The settlement will be calculated in terms of a percentage of the budget for 2014-2020, with Britain contributing as if it had stayed in the EU for 2019 and 2020 and including a British rebate.

Following its withdrawal from the EU, the UK will continue to participate in the EU programs financed by the 2014-2020 budget until their closure.

Beyond then, Britain will remain liable for its share of the EU's contingent liabilities, such as financial assistance or operations managed by the European Investment Bank (EIB): "The UK liability will be limited to decisions on each financial operation adopted prior to the date of withdrawal."

To avoid a disruption to the EIB's operations, Britain will provide a guarantee for an amount equal to its callable capital. This guarantee will decrease over time.

"The UK share of the paid-in capital will be reimbursed in 12 annual instalments starting at the end of 2019. The first eleven instalments will be €300 million each and the final one will be €195,903,950."

On the European Central Bank, "the paid-in capital of the UK in the ECB will be reimbursed to the Bank of England (BoE) after the date of withdrawal".