Fundamental Analysis Brexit “Divorce” Settlement Brexit “Divorce” Settlement Thursday, 30 November 2017 8:56 Share 0 Tweet 0 Pin it 0 +1 Arguably, the easiest of the three Brexit roadblocks to resolve is the question of Britain’s outstanding obligations to the EU, wrongly (but compellingly) dubbed “the divorce settlement”. It will come as a surprise to nobody that the UK was expected to vote to remain in the EU following its referendum in June 2016. As a consequence of this, and as a mark of how far ahead planning commitments are made, the British government had pledged financial support to EU projects running up to 2020. Equally, for 45 years, the UK has been a member of the EU with British citizens working for all of its institutions from the Joint Research Centres to the EU Commission itself. These workers have accrued on-going pension rights and the pensions of British retirees working in the EU must continue to be met. It is unclear what will happen to British nationals working for EU organisations going forward. Whilst many are on short-term renewable contracts which will be allowed to lapse, others enjoy long-term contracts. However, a requirement of working with an EU organisation is that its staff must be drawn from EU countries, so the status of these citizens is unclear, going forward. To date, the EU negotiation team has not placed a figure on what it believes the UK’s financial liabilities to it are, going forward. It has required that the UK draw up a comprehensive list of obligations that it believes it has and this will be used to assess the sum compared, one assumes, to a similar list prepared by the EU. In her Florence speech, Mrs May promised that no EU state would be worse off between now and 2020 due to the UK’s decision to leave the EU. She proposed a sum of £20 billion to cover the UK’s contributions to existing programmes and to cover a two-year transitional period that the UK is requesting immediately after its departure. This was never styled as a “final offer”; nor was it clear from the UK side quite what it covered. Whilst the move was welcomed as a gambit to unblock negotiations, it was made clear from numerous sources that the sum was not sufficient. Unconfirmed rumours are now circulating that the UK has agreed to increase this to £50 billion in a bid to get the EU to agree to move negotiations on to covering trade when the European Council meet in December. The offer is not the end of the story. The EU has consistently stated that the settlement cannot be contingent upon a trade deal since it is simply a settling of accounts. In the UK, the public mood over such a large sum remains to be seen. The Leave campaign promised that quitting the EU would mean more money, not less, in UK coffers. Remain supporting politicians have been quick to condemn the sum as wastage since the UK had a much better deal within the EU – the offer comes at a time of continuing austerity in the UK in which public services are stretched. The offer is also deeply unpopular with the wilder wing of the Eurosceptic movement that thinks the UK should not be paying anything “to leave” the EU and are advocating abandoning the talks with “no deal” and a decision to move to trading on WTO rules only – most analysts thing this would be a recipe for economic catastrophe. In short, the “easiest” of the three roadblocks to overcome is just as intractable as the others since there are completely conflicting opinions on what it should be. The government will only be able to sell the offer to the public if it ensures that talks move on to trade, a guarantee that the EU will surely refuse to give. Even if this impasse is resolved, all three elements of the roadblock must be cleared for talks to progress. Dr. Mike Campbell Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.