Brexit divorce bill should be no more than £26 billion says think tank

Updated: 
General Election 2017

The UK's "divorce bill" on leaving the European Union should be no more than £26 billion (30 billion euro), a free-market think tank has calculated.

European Commission president Jean-Claude Juncker has said the Brexit financial settlement could see the UK billed for around £50 billion, while unconfirmed reports have suggested EU officials believe the total could reach as much as £100 billion.

The sums cover commitments to EU budgets made during the UK's membership, along with liabilities for financial burdens such as ongoing pension payments for EU officials.

But Institute for Economic Affairs (IEA) chief economist Julian Jessop - head of the think tank's Brexit Unit, which launched on Monday - said that the "upper limit" for any payment should be £21 billion for liabilities under the EU's multi-year budget stretching up to 2020, along with around £5 billion for pensions and other one-off items.

"The Brexit negotiations will need to decide how much the UK will pay the EU to settle financial obligations undertaken while it was a member," said Mr Jessop.

Many Brits would suggest that the right figure is in the ballpark of zero. However, some EU officials have suggested the bill should be north of 100 billion euros.

"A compromise towards the lower end of this range might be acceptable - a figure of around £26 billion could be justified using certain principles. But if the two sides fail to agree a good deal on the terms of any future relationship, the UK can, and should, walk away without paying a penny."

The IEA said that a good outcome to negotiations underway between Brexit Secretary David Davis and EU chief negotiator Michel Barnier would provide "a golden opportunity to create a more flexible, open and vibrant economy and to champion by example the benefits of free trade around the world".

But it warned: "A positive outcome is not guaranteed. Negotiations are ongoing and a 'good deal' is far from certain; Brexit could end up resulting in more bureaucracy and state intervention, rather than less."