Brexit Bill Should Be as Low as £5 Billion, Says Institute of Chartered Accountants

The Institute of Chartered Accountants in England and Wales (ICAEW) estimates the United Kingdom’s Brexit bill should be as low as £5 billion – far less than the 100 billion euros mooted in Brussels.

In a study titled “Analysing the EU Exit Charge“, the ICAEW posits three scenarios: a “low” bill of around £5 billion, a “high” bill of around £30 billion, and “a more likely central scenario” in which Britain is faced with a £15 billion bill.

To arrive at its central scenario, the institute suggests that “the UK could be asked to contribute a gross amount of £55 billion, but the net cost to the UK would probably be closer to £15 billion after deducting rebates, spending in the UK and the realisation of the UK’s investment in the European Investment Bank”.

The central scenario “excludes contributions to the EU 2019 and 2020 budgets after the UK leaves, as we believe the UK has a strong case for arguing that it should not be liable for authorised spending that will not be committed to until after its departure”.

Writing on the institute’s CEO blog, Chief Executive Michael Izza describes how the analysis breaks down the bill in three parts:

1. Settling of accounts which would include realisation of the UK’s investment in the European Investment Bank and its share of the European Union’s balance sheet.
2. Authorised spending by the EU not yet incurred. This would include multi-year programmes such as, for example, research grants to universities.
3. Committed spending for programmes that are included within the current EU financial framework for 2014-2020. Much of this goes towards development funding for newer EU members particularly those in Eastern Europe.

“It is this third component that is likely to be the most contentious”, he points out, “as the negotiation will be around to what extent the UK is obliged to fund programmes that may not be underway or completed when it leaves in March 2019.”

Izza accepts the final sum will ultimately be a matter of negotiation but notes positively that “our analysis shows that the exit charge is likely to be much lower than current extreme predictions“.

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