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Please can someone explain? Will we pay if we leave EU without a deal?

(581 Posts)
HappydaysArehere Tue 17-Oct-17 19:53:32

With all this talk of billions of pounds which we are supposed to owe if we leave and talk of continuing to pay after we leave, I am in the dark. If we walk away with no deal will we pay anything like the amounts talked about? If we are able to do that surely the EU will be big losers as well as us! I am at a loss. Grateful for your input as I am bewildered. I voted to remain but must say the shenanigans being played by the EU are showing them as more like the Mafia than a democratic institution.

Spinflight Wed 18-Oct-17 03:37:32

The short answer is no Happydays.

We owe our subs, which are made up in three parts, whilst we are still members. In other words until March 2019.

These subs comprise of a contribution based upon the size of our economy ( properly GNI), a proportion of all the VAT paid in the country and what the EU euphemistically calls it's 'own resources'.

The latter comprises our fish stocks, which the EU parcels up amongst the various EU fishing fleets, and revenues from 'their' customs union.

Which is a bit like a European car boot sale. As we are in it and pay our dues, we can buy and sell from other cars ( EU countries) without paying duties or tariffs.

If however someone from outside the EU wants to sell us stuff then the EU charges tariffs ( EU external tariffs) on that trade.

Hence currently 55% of our trade is with the rest of the world, and the EU takes 80% of the tariffs which they impose on that trade.

After March 2019 we leave the car boot sale, no longer pay our subs and can decide our own tariffs ( preferably none).

When we sell things to the EU our companies will have to pay their external tariff. Similarly when the EU sells us something they will have to pay any tariffs we impose. Anyone selling us things from the rest of the world too, though we'll keep all of the revenue rather than 20%.

Which is where WTO rules come into the equation. Basically international agreements on maximum tariffs.

The EU's argument is that we signed up to their entire budget cycle, which lasts to 2021. Hence they've planned to spend stuff on things until then and assumed our money would fund it all, not just till early 2019.

Us leaving blows a hoge hole in their budget which other nations would have to fill, or they'd have to reduce spending. Germany reckoned about £35 billion a year, which sounds about right.

Our contribution based on GNI is £18 billion. VAT sent to Brussels £2-3 billion. External tariff revenue about £12 billion ( though our own government and the EU are rather shy about publishing the figure). Fishing for leave reckons £5 billion, but think this is a bit low myself, and it doesn't really affect Germany.

Whatever the actual figure is the EU will be out of pocket by this amount times three years hence has it's knickers in a twist. Hence the demands ( £100 billion etc).

Of course outside their little car boot sale another component is added, namely that of the tariffs in trade between ourselves and the EU. Due to the massive trade imbalance though this is very much in our favour. Under WTO rules our companies would pay about £5 billion a year, and the treasury would receive £12.7 billion in extra receipts. I like to think of this as BMW and Volkswagon paying my taxes for me. smile

There's no legal reason why we should give them a penny past 2019. Also no deal would mean increased revenues for the treasury.

Trouble is it would also upset lots of powerful people in London.

HappydaysArehere Wed 18-Oct-17 10:38:01

Spin flight. Thank you so much for your detailed analysis. You have answered my question brilliantly. It seems to me that the EU’s theatricals are driven by extracting every “cent” from us in an attempt to persuade the U.K. to change its mind and remain in the EU. The media is assisting their efforts by continually undermining the Government’s negotiating tactics. If ever we have needed to stick together and act as one it is now. Should the public decide to stay in I should imagine that we would be required to join the euro which is a condition for new enrtrants. As said before, I voted remain but now I am not at all certain that I would do so again. The bullying and ridiculing which is going on at the present time reveals an institution which I do not want to be part of.

user1486062886 Wed 18-Oct-17 10:49:16

I hope everyone can now see the EU just want are money, (tax payers money, mine and yours) They have no interest in trying to keep us in,Trying to win over the uk people that doesn’t like the existing system, no we are just a cash cow, I was hoping for more from them,

SilverySurfer Sat 21-Oct-17 16:01:36

I expected no less, they are going to miss our financial contributions when they cease in 2019. Too few financially secure countries propping up too many financially fragile - who knows what the future holds. I'm just happy that we shall be out of it.

OliviaD68 Tue 24-Oct-17 08:31:51

Complete nonsense.

You asked if we leave without deal do we need to pay?

Question is irrelevant. The massive economic damage caused by going onto WTO rules - which no country anywhere trades on - would dwarf whatever payment would be due to the EU as a result of commitments the UK has already made.

And WTO is particularly bad because of Non Tariff Barriers to trade. Not necessarily the tariffs.

What’s really weird about Brexit is we are leaving an absolutely frictionless trade area - the EU is the largest trading area in the world in terms of GDP - and dropping over 50 trade agreements ... all in the name of free trade? Because we want more free trade? Can someone explain this ?

OliviaD68 Tue 24-Oct-17 09:20:39

The UK derives 30% of its GDP from trade in goods and services. Source: OECD.

Can someone explain why it is OK to put this at risk - with knock-on effects through the domestic economy - for purported additional benefits ... to trade?

TwattyCatty Tue 24-Oct-17 09:26:58

voted to remain but must say the shenanigans being played by the EU are showing them as more like the Mafia than a democratic institution

Why do people keep repeating this Daily Mail nonsense? No-one is acting like the mafia, fgs. The EU is merely asking you to pay the money that you promised to when you made commitments. You want to up and leave without honouring them, you can't do that.

Do you call the phone company mafia esque if they expect you to pay the bill for the contract you signed up for?

Pay your bills, UK, stop trying to cheat everyone just because you flounced in a fit of pique!

Spinflight Tue 24-Oct-17 09:34:21

If we don't will they send the bailiffs round? Lol

French bailiffs or were the Germans thinking of having another go?

Moussemoose Tue 24-Oct-17 09:36:17

voted to remain but must say the shenanigans being played by the EU are showing them as more like the Mafia than a democratic institution

The EU are fighting for the best deal for their members. They are negotiating in a way that will financially benefit the people who voted for it. Exactly how is that undemocratic?

OliviaD68 Tue 24-Oct-17 09:47:59

@Moussemoose. Completely.

Last time I checked the UK was a country that was respectable and paid its bills. It has made commitments which it needs to satisfy. As a concept: simples.

So any settlement is just that - paying bills. But also to include assets like the stake in the EIB ...

For the rest, well the UK will be a 'third country'. If we're lucky we will get the same deal as Canada over a period of many years. This will still mean the destruction of many industries because of Non-Tariff Barriers - eg the auto industry will collapse because of JIT supply chains. But places like Sunderland voted for Leave so they will have to move elsewhere to find jobs after Nissan shutters its plant there.

Spinflight Tue 24-Oct-17 10:38:31

Pish and piddle.

No deal would mean tariffs on the 1 million German cars we import each year. Which makes them more expensive. Nissan etc would do well out of it.

And the EU isn't negotiating hard for it's members. What planet are you on? They call us treasure island as profits are higher and consumption is strong for their exports.

Despite the eurozones weakness the EU wants to look strong, because it suits the EU crats not the people they supposedly represent.

As for all these pointless assertions about phone bills and us making commitments, show me something, anything, in article 50 which says that contributions have to continue after exit?

There's nowt, nothing, nada, zilch.

Which equals our commitments after March 2019.

TwattyCatty Tue 24-Oct-17 10:46:28

The smug insistence of brexiters that the UK is some sort of prize the EU has lost would be funny if it weren't so pathetic.
Nobody cares that you are leaving, only about the mess you have made for everyone else, as well as yourselves.
Just pay what you owe and then bugger off and wallow in the mess you have made for yourselves.

M4Dad Tue 24-Oct-17 10:48:15

I'm not sure why we haven't discussed what the EU owes the UK in terms of shared assets after decades of contributing billions of pounds.

BowlingShoes Tue 24-Oct-17 10:50:32

It is politically and economically expedient to pay money we owe to the EU (for projects we signed up to as members and which were costed including our contributions, pensions of our MEP's etc.)

No country in the world is going to want to deal with a nation that shows it doesn't meet its financial obligations.

Hermagsjesty Tue 24-Oct-17 10:53:39

The notion they are acting ‘like the mafia’ is ludicrous - they’re acting in the financial and political interests of thier member states - exactly as they should be. It was our choice to leave.

Moussemoose Tue 24-Oct-17 10:53:59

Despite the eurozones weakness the EU wants to look strong, because it suits the EU crats not the people they supposedly represent

Not sure I understand the distinction. Negotiating hard, making the EU look strong, fighting for the best deal for its members suits both the officials and the people.

If our PM was competent she would look strong and get us a good deal. She isn't competent, and she won't get us a good deal. How is that the EUs fault and again how is that undemocratic?

BowlingShoes Tue 24-Oct-17 10:56:16

Despite the eurozones weakness

The Eurozone is currently strongly outperforming the UK in terms if economic growth.

BowlingShoes Tue 24-Oct-17 10:57:02

in terms of

Itwillbefine1 Tue 24-Oct-17 10:57:31

Who should pay the pensions of the UK MEPs? Farage and Co. are still on the payroll.

I have never heard of the UK as 'Treasure Island'.

Rather than being aggrieved at the EU, think of the divorce analogy. If one partner in a marriage wants a divorce, wouldn't the 'left' partner be well advised to get legal advice and secure the best possible financial arrangement.

M4Dad Tue 24-Oct-17 11:00:28

The Eurozone is currently strongly outperforming the UK in terms if economic growth

In the last quarter the only EU countries to outperform the UK in terms of growth were Sweden, France and Spain (with Spain starting from very near the bottom)

TwattyCatty Tue 24-Oct-17 11:01:46

I'm not sure why we haven't discussed what the EU owes the UK in terms of shared assets after decades of contributing billions of pounds

And decades of getting billions of pounds, don't forget. And gaining billions and billions more through membership. You joined in 73 as the limping sick man of Europe, and membership of the worlds biggest market allowed you to grow in a way you could never have achieved on your own.
You're owed nothing.

M4Dad Tue 24-Oct-17 11:06:05


We grew because of Thatcher's policies, not solely because of the EU.

You're owed nothing

After bailing Europe out of TWO world wars and racking up mountains of debt to secure your freedom - neither are you.

MongerTruffle Tue 24-Oct-17 11:06:57
The UK was effectively begging to join the EEC.

Antigonads Tue 24-Oct-17 11:07:12

I seem to remember reading that we paid a massive amount when we joined to cover stuff that had gone before, and now we are expected to pay a massive amount to leave.

Strange system.

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