Brexit Divorce Could Cost Over £10 Billion More Than Estimated – MP Committee

Brexit Divorce Could Cost Over £10 Billion More Than Estimated – MP Committee © REUTERS / Peter Nicholls

The direct cost of the UK’s withdrawal from the European Union (EU) has been a topic of debate even prior to the Brexit referendum in 2016, and the issue is seemingly once again creeping into the limelight after a parliamentary committee issued a warning.

The Public Account’s Committee (PAC) warned on Tuesday that Britain could ultimately pay up to £50 billion (almost $66 billion at the current GBP/USD exchange rate) to the EU as its financial settlement for withdrawing from the trading bloc, The Evening Standard reported.

Earlier estimates of the UK’s divorce bill by the Treasury failed to consider all payments and obligations to EU projects, such as a £3 billion payment to the European Development Fund, the committee said.

Therefore, Britain could end up paying significantly more than previously thought, at the expense of taxpayers.  

The Treasury’s official estimate put the direct cost of Brexit – not taking into account restricted post-Brexit trading conditions or economic shocks – at £35-£39 billion.  

Although the government will gain some money as a result of leaving the union, MPs and the Institute for Fiscal Studies (IFS) have said there will still be a sizeable net loss, contradicting UK Prime Minister Theresa May’s claim that they’ll be money left over, which could be spent on public services.

Britain’s financial settlement to the EU was agreed towards the end of 2017, after intense negotiations with Brussels. A few months later, a draft deal was agreed, showing progress on a number of key matters, including the rights of EU citizens in the UK post-Brexit.

Despite the government suffering a string of defeats to its EU Withdrawal Bill in parliament, progress is slowly being made, though PM May remains at risk of a rebellion by cabals and factions inside the Tory party.