U.K. Admits Brexit Bill Will Be Paid Even Without Trade Deal

(Bloomberg) -- A leading Brexit minister in Theresa May’s government was forced into a painful political admission -- the U.K. is legally bound to settle its divorce bill even if it doesn’t get a future trade deal with the European Union.

To make the bitter pill of 39 billion pounds ($52 billion) easier to swallow for the public and Brexit cheerleaders, May has been insisting that the financial settlement and a free-trade deal are part of the same package. The EU has always been clear they’re separate.

U.K. Admits Brexit Bill Will Be Paid Even Without Trade Deal

After a grilling by lawmakers, Suella Braverman was forced to acknowledge that Parliament will vote on paying the so-called Brexit bill before the legal text of a future trade agreement is ready. Any decision to halt payments -- which are due to continue for years -- would require a renegotiation.

It’s particularly significant that the admission comes from Braverman, a Brexit campaigner who used to head a group of some 60 Conservative euroskeptic lawmakers. Their current leader, Jacob Rees-Mogg has been especially critical of May and insists the U.K. should not pay a penny without getting a trade deal in return.

It’s a toxic topic and one likely to inflame hardliners worried that May is making too many concessions, including the latest plan to maintain ties to the customs union for a number of years to get around the problem of how to keep an open border in Northern Ireland. It’s also ammunition for anti-Brexit lawmakers trying to thwart the divorce.

Boris Weighs In

Foreign Secretary Boris Johnson, a leader of the Brexit campaign, pushed back against the comments, but stopped well short of knocking them down.

"Article 50 makes absolutely clear that the terms of the withdrawal have to be seen in the context of the future relationship,” he told reporters in Santiago, Chile. Article 50 is the clause in the EU treaty that covers the exit process.

"Nothing is agreed until everything is agreed," he said, echoing a line that’s often repeated on both sides and refers to the idea that any agreements made along the way can still fall apart until the final deal is signed. However, as far as the EU is concerned, the withdrawal agreement is a separate negotiation to the trade deal.

British officials have said in private that they were looking to make the payments conditional on sealing that future trading relationship, conscious of how unpopular it would be domestically for Britain to be seen to continue to pay billions of pounds to the EU without securing a commercial agreement.

‘Good Faith’

Asked four times by lawmakers on the House of Commons Brexit Committee if the government would try to insert conditions tying payments to a future trade deal, Braverman dodged the question before finally citing a “good faith” clause in the divorce agreement.

“If there was going to be a change in circumstances whereby those payments were to stop, that would require renegotiating and looking at what’s been agreed when it comes to the financial agreement with the EU,” Braverman said. “The duty of good faith should not be ignored in this context. It’s more than just words.”

The line of questioning was unrelenting as lawmaker after lawmaker returned to the topic. Hilary Benn, the chair of the committee, demanded a ‘yes or no’ answer on whether the government would attempt to insert some conditions into the withdrawal agreement.

At one point things got so uncomfortable for Braverman that Rees-Mogg, part of the panel of questioners, tried to come to her rescue by offering her an answer.

Lawmakers have to vote on the Brexit deal later this year. Brexit Secretary David Davis has said it will be hard for Parliament to approve the bill unless they have a detailed idea about what kind of trade deal is on offer.

The EU says the bill is a settlement for liabilities accrued as a member and has nothing to do with the future relationship.

Negotiations are structured in such a way that so far they’ve nearly all been about the divorce, and by October a separation agreement is due to be agreed. Alongside that, there will be a political statement on what both sides want the future trading relationship to look like -- but that won’t be legally binding.

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