Monday 29 May 2017

Ireland may have to bridge cash gap if UK leaves EU without 'paying what it owes'

Stock photo: PA
Stock photo: PA
Colm Kelpie

Colm Kelpie

Countries like Ireland will have to stump up more cash for the EU budget if the UK leaves the bloc without paying what it allegedly owes, a UK parliamentary committee has been told.

The Brexit select committee heard net contributors to Europe's budget - of which Ireland is one - will have to bridge the gap if Britain walks away without settling its bill to cover the cost of outstanding liabilities such as pensions.

And this could be “particularly toxic",  Professor Iain Begg of the Europe Institute at the London School of Economics told MPs.

Asked if he believed the €60bn bill mooted by the European Commission was reasonable, Prof Begg said: “Reasonable is a difficult expression. It’s a credible number, because you can work out how they got there using the different components.”

He said the United Kingdom could potentially be liable for contributions to the EU budget beyond the likely date for Brexit in 2019, and that there were outstanding pension contributions due as well as a legal obligation to pay for commitments agreed before that date, but which don’t fall due until a later date.

“If you top them up, you can easily get to the €60bn,” Prof Begg added.

European Commission President Jean Claude Juncker has said the bill would be in the region of £50bn, roughly €60bn, and that the final amount would be “calculated scientifically”.

He insisted it was not a "punishment" for withdrawal, but merely the settling of commitments made by the UK.

The issue of the bill is likely to dominate the early stage of the talks process, due to take place in June after the UK's snap election on June 8.

Although some Eurosceptics have questioned whether the UK should pay a bill at all, Prime Minister Theresa May has said that the country would meet its obligations. There is so far no agreement, however, on the final amount.

Prof Begg said that the EU budget is driven by multi-annual expenditure commitments, which means those commitments will have to be met, even if the UK walks away without meeting its financial obligations. 

“That means that if Britain withdraws its money from the EU budget, somebody else is going to have to pay in more, rather than expenditure being cut,” he said.

“And that somebody else is inevitably going to be the net contributors, which is going to be particularly toxic. So that’s one political consequence.”

In 2013, Ireland became a net contributor to the EU Budget for the first time since it joined the bloc in 1973.

Last year, Ireland received €1.771bn and made payments totalling €1.952bn.

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