Grantham Journal column: EU settlement will be expensive - but far less than being a member
We are approaching a moment of truth in the negotiation of Brexit.
Do the other 27 members of the EU really want to do a deal? Or are they more interested in punishing the UK for the temerity of our decision to leave?
I am optimistic. Optimistic that EU member states really do want to do a deal. Optimistic that a deal in Britain’s national interest can and will be done. There is much speculation in the media about the size of the financial settlement. It is important that everyone should understand what it involves and why it is in our interest to agree to it. One element relates to the commitments that the EU made while we were a member, but whose costs will crystallise after we have left. The key point to understand about these commitments is that the UK is already on the hook for its share of their cost. We not going to be paying any more to meet these obligations than we would have paid if we had remained members of the EU.
The second element of the financial settlement relates to the 2-year transition from 29 March 2019 (when we will formally leave the European Union) until 2021 (when we want our new relationship and new trading arrangements to start.) The Prime Minister proposed the transition to meet the needs of Britain’s business leaders who said it would take time to prepare for a new set of rules after Brexit and stability while they do so. During the transition, for a strictly limited period, all of the arrangements flowing from our membership of the EU – the rules relating to the single market, the customs union and immigration – will continue to apply. Since we will continue to receive the benefits of membership, we will also have to pay the club’s membership fees - our annual net contribution – for two more years.
Settling the accounts with the EU will be expensive. But far less than remaining a member of the EU, which would have cost us more than £160 billion over the next 10 years. If we want to avoid tariffs on British exports to EU markets, we need to be ready to meet our commitments. Once we have done so, we will be free to spend the money on whatever the British people want.