Britain will be forced to pay its $71.8 billion Brexit divorce bill even if it leaves the EU without a deal

Matt Cardy/ Getty ImagesBritish prime minister and Conservative party leader Theresa May.
  • Britain would be required to pay its £39 billion ($AU71.8 billion) Brexit divorce bill even if it left the EU without a trade deal, according to the chief of the government’s spending watchdog.
  • Theresa May and Brexit secretary David Davis have repeatedly warned they will not pay the bill without a trade deal.

  • But Sir Amyas Morse, auditor general of the National Audit Office, said the payments will become legally binding as soon as the UK signs a Withdrawal Agreement.

LONDON – Britain would be required to pay its £39 billion ($AU71.8 billion) Brexit divorce bill even if it left the European Union without a trade deal, according to the chief of the government’s spending watchdog.

Sir Amyas Morse, auditor general of the National Audit Office, told MPs on Tuesday that the divorce payment will become legally binding as soon as both parties sign the Withdrawal Treaty, which is likely to happen at least two years before any trade deal is struck.

Morse also said that most of the financial commitments are tied to the two-year transition period, scheduled to begin in March next year, and so would apply even if Britain had failed to secure a deal at the end of that period.

The comments contradict previous statements made by Prime Minister Theresa May and Brexit secretary David Davis. Both have previously said they would refuse to pay the bill if the EU denies Britain a post-Brexit trade deal.

During an evidence session at the Commons Treasury select committee, Chairwoman Nicky Morgan aked Morse: “‘The prime minister told the House in relation to the financial settlement ‘that if we do not agree the future partnership, then the offer is off the table.’

Is it your understanding that the payment on the financial settlement is conditional on an agreement on the future partnership?””

Morse replied: “No, that’s not my understanding.

The payments would fall for us to pay under international law.

“My understanding is as follows: That, in the Autumn leading up to a significant vote, there will be a draft of the Withdrawal Treaty and at the same time there will be what I will call a ‘statement of intent’ for how the rest of the relationship is intended to work.”

“The treaty is approved, and the idea is the statement of intention is meant to assist in approving that treaty, but the treaty would pass into law in time for is to leave the EU and then would become legally binding.

“Therefore the payments would fall for us to pay no matter what under international law.

“The reason why that would be is the payments are primarily in respect of continuing membership for the extension period – they don’t relate directly to whatever the future relationship may be.”

The comments are likely to outrage Conservative Brexiteers, who baulked at the size of the divorce payment when it was agreed in December. On Tuesday, Jacob Rees-Mogg, who leads the group of hardline Tory Brexiteer MPs called the European Research Group, said May should call the EU’s bluff by withholding the divorce bill.

The UK and EU have agreed on the terms of a transition deal and are currently negotiating the remaining part of the Withdrawal Agreement, which covers issues like the Northern Irish border, citizens’ rights, and the divorce payment, which is designed to cover Britain’s existing financial commitments to the EU budget.

Both parties hope to agree on the final Withdrawal Agreement by October. The deal is also likely to include a political statement describing the broad terms of a future UK-EU trade deal.

The UK is then scheduled to enter into a two-year transition window during which both sides hope to thrash out the details of a trade deal.

May’s suggestion that Britain would not pay the divorce payment appears to be based on the assumption that it could refuse to make any payments at the end of the transition period, which is likely to end in December 2020.

However, Morse’s remarks made clear that the financial payments will become legally binding as soon as the UK signs the Withdrawal Agreement before it leaves the EU in March next year.

The Treasury has estimated the bill will be between £35 billion and £39 billion. Britain will not finish paying off its financial settlements until the year 2064, according to the Office for Budget Responsibility.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.