EU Warns Over Future Ties If Next U.K. Premier Withholds Bill

(Bloomberg) --

The U.K.’s next prime minister will be putting at risk the country’s future relations with the European Union if he refuses to pay the 39 billion-pound ($49 billion) financial settlement the government agreed to as part of the Brexit deal, the EU said.

EU Budget Commissioner Guenther Oettinger said the bill formed the basis of ties with the bloc that the two sides will negotiate when Britain leaves. The money is part of the overall Brexit deal which, though agreed between outgoing Prime Minister Theresa May and all the EU’s other leaders in November, hasn’t been approved by the British Parliament.

Boris Johnson, the front-runner to be next prime minister, told the Sunday Times last weekend that he would withhold the payment unless the EU agrees to better terms for the divorce.

“Mrs. May’s government accepted the payment of that amount, so we expect that no matter which government will be our negotiating partner in the future, we expect them to accept that bill,” Oettinger told reporters in Brussels. “No matter who’s in charge he or she will want to ensure that the relationship between the U.K. and the EU has a future.”

The EU has never confirmed the U.K.’s estimate that the financial settlement amounts to 39 billion pounds. It covers Britain’s commitment to projects agreed as part of the EU’s seven-year budget from 2014, a fee to cover a post-Brexit transitional arrangement until the end of 2020 and the cost of pensions for EU staff. The U.K. agreed to pay it over many years rather than as a lump sum.

Fair Settlement

While the U.K.’s commitment to the bill would fall away if the country leaves the bloc without a deal when the current Brexit extension expires on Oct. 31, EU officials say that Britain would still, by law, be liable for a large part of it. In any case, the bloc would make it a condition of restarting talks on a future trade agreement.

U.K. Chancellor of the Exchequer Philip Hammond has said that even in a no-deal Brexit Britain would have to pay at least some of its liabilities, and warned that failing to do so would damage the country’s reputation.

“We need to settle old debts fairly,” Oettinger said, adding that the U.K.’s future participation in European projects in areas such as science and space research and university cooperation could be put at risk if the Brexit bill is withheld.

To contact the reporter on this story: Ian Wishart in Brussels at iwishart@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Andrew Atkinson, Emma Ross-Thomas

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