Wednesday, July 18, 2018
Business

OBR: UK will be paying Brexit divorce bill until 2064

The Office for Budget Responsibility estimates the UK will be paying its Brexit divorce bill until 2064.

Published to coincide with Philip Hammond's Spring Statement today, the OBR puts the final figure at £37.1bn – squarely in the middle of government estimates of £35bn-£39bn.

The body estimates that for the years 2019 and 2020 the UK will contribute "as if it had remained in the Union" – a total of £16.bn. From 2021-2028, the UK will pay £18.2bn as part of "reste a liquider", in other words the EU's unfunded future liabilities.

Between 2019 and 2064, the UK is also down to pay £2.5bn for "other net liabilities", mostly linked to pensions.

But the OBR noted that a key feature of the joint agreement struck by Theresa May and Jean-Claude Juncker in December was that the UK would "not be required to incur expenditures earlier than would be the case if it had remained a member state, unless agreed by both sides".

The forecasting body estimates that the UK will be spending less than if it had remained a member from 2020/21, when we will be £3bn better off. The following year we will be paying £3.3bn less than we would have done, rising to £5.8bn in 2022/23.

It also noted that these direct payments did not include "the indirect effects of changes in trade, migration and other policy regimes on the economy and its capacity to generate tax receipts".

"Such effects are impossible to quantify now, since there is no meaningful basis upon which to predict the precise end-point of the negotiations that are underway," the OBR said, echoing points made previously by Brexit secretary David Davis.

The Treasury has also revealed its breakdown of the £3bn government departmental spend allocated for the next two years to help prepare for Brexit.

The Home Office takes the largest slice, pocketing £395m as it prepares for a new immigration system. The Department for Environment, Food and Rural Affairs (Defra), headed by Michael Gove, receives the second largest chunk of money – £310m in total. HMRC comes third, with £260m.

The figures do not include the Department for Exiting the EU (Dexeu).

Original Article

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