Brexit bill for UK, billions higher than first estimated

The  Brexit divorce bill for the UK could be billions higher than the £35bn-£39bn figure put forward by Theresa May, a report by Whitehall’s spending watchdog suggested, according to The Guardian.

The National Audit Office (NAO) has warned that the UK could pay an extra £3bn more in budget contributions as well as an additional £2.9bn to the European Development Fund.

Auditors have concluded that the Treasury’s estimate includes £7.2bn of receipts which will go directly to the private sector and not to the government’s accounts.

The findings will anger Eurosceptic Tory MPs who have previously questioned whether the government should pay the lower estimate of £35bn.

Philip Hammond, the chancellor, will be questioned about the NAO’s conclusions next Wednesday when he appears before the Treasury committee.

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Responding to the report, Meg Hillier, the Labour chair of the public accounts committee, said there could well be an increase in the overall costs. “Whereas the promises made by some Brexiters of the bounty that our public services would receive post-Brexit are likely to be downgraded, I fear the cost of the UK leaving the EU could increase further.”

May told parliament in December that the bill would be between £35bn and £39bn, a fee jointly agreed in a meeting between the Treasury and the EU’s chief Brexit negotiator, Michel Barnier.

Auditors found that the total amount that the UK would contribute to the EU annual budgets in 2019 and 2020 would be calculated on the basis of the UK’s economic outlook, which would also partly determine Britain’s share of outstanding commitments and liabilities after 2020.

Britain’s exit settlement could not be defined until there was more certainty in areas such as the economy’s performance in 2019 and 2020, auditors said.

Costs still to be worked out include those relating to pension liabilities, the amount British organisations will receive in EU funding after withdrawal and exchange rate fluctuations because the divorce bill will be paid in euros, according to the study.