Divorce settlement or leaving the club? A breakdown of the Brexit bill

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Abstract:

The ‘Brexit bill’ is an expected payment to be made by the United Kingdom that would settle its financial commitments when it leaves the European Union. While in our view this financial settlement is the least important economic issue in the Brexit negotiations, a conditional agreement at least on the methodology for calculating the Brexit bill could be a prerequisite for the more meaningful discussions on the new EUUK economic relationship after Brexit, such as future trade, financial services and labour mobility cooperation.

To bring transparency to the debate and to foster a quick agreement on the bill, we make a comprehensive attempt to quantify the various assets and liabilities that might be factors in the financial settlement. The size of the Brexit bill will depend on fundamental political compromises and choices, which we discuss.

Depending on the scenario, the long-run net Brexit bill could range from €25.4 billion to €65.1 billion, possibly with a large upfront UK payment followed by significant EU reimbursements later.

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