Q: does No Deal mean no £39bn divorce payment?

[Miljah]

I just read that the odious Tim Martin of Wetherspoons said that like it was a fact.

Is it?

I would have thought that whatever, or no deal we strike, if we don't want our post Brexit credit rating to be down there with Burkino Faso's, we still have to pay up.

No.
Around £19 Billion is due to be paid for ongoing commitments until March 29th. The remainder would be due if the UK signs the WA and goes into transition.
Failure to pay the £19 Billion, which has already been signed off, would be a very bad negotiating position when the UK wants to do deals with anyone. It breaks trust immediately.

How would you feel about setting up a business partnership with someone you knew had abandoned a 40 billion pound contract 'because they wanted to'?

That's how every country in the world will see us if we don't actually follow through on our commitments.

In the unlikely event of a no deal, I would guess that some of the money would be paid (maybe the 19Billion LeClerc mentioned above) and the rest would be wrangled over.
Both sides would want to remain on friendly and co-operative terms but money is a good bargaining tool. We would obviously not pay owt for nowt. In a no deal situation, everything would be up for negotiation.

I believe the sum to be paid is in Dollars so it will vary, and if/when the Pound crashes it will get more expensive, a bit of an incentive to make the UK economy good, but so far apart from a bit of a blip mostly caused by stockpiling, the mid future is not promising.
It is not a lump sum of course and can probably be 'traded' away but I am guessing this bit.

The sum is paid in Euros!

Thanks all.

It was my impression that at least some, a fair slab of the cash was payable in any scenario.

It strengthens my assertion that Tim Marin in a knob.

...is a knob!

In any discussion of our EU membership contribution I like to put this hoc chart up to keep it all in perspective in terms of GDP.

Gov not hoc

Tim Martin is a knob

He said he could import wine from Chile cheaper from outside the EU, except there is no tariff on Chilean wine thanks to an EU FTA.

He also said he could do so for Aussie wine, but that works out at 7p per bottle, when VAT and Duty is £2.50 ( more in pubs).

There are all sorts of things wrong with the typical Leaver's impression of the £39 billion.

A) It's not a "payment to get a deal" i.e. we're not buying ourselves a future arrangement. It's money we already committed to spending, both in terms of future EU budget we still have to pay (just like you may have to keep paying for a while if you want to get out of a phone or broadband contract, because there's a minimum contract period), and in terms of related costs that we created and therefore are responsible for (e.g. the pensions for past UK MEPs and functionaries in Brussels). The EU also took into account the value of our share of the EU's total assets (e.g. government buildings, etc.) that we won't be using any more when we're not EU members, and deducted that from the total to arrive at the £39 billion.

B) Legally it is possible that we might be able to walk away from paying, though it would cause an almighty row that would burn on for years. However, that would pretty much guarantee nobody - neither the EU, nor other potential future partners - would be willing to sign a decent trade deal with us? Why? Because we'd have proven to them we were unreliable and not to be trusted.

Putting it into everyday terms, would you go into business with somebody who very publicly blew off their debts to their previous business and walked away? Not because they were bankrupt, but just because they didn't particularly feel like paying them. I thought not.

C) The money isn't due as a lump sum. We're not trundling a convoy of trucks stuffed with £50 notes to Brussels. Instead, it's due in decreasing amounts over the next 40-50 years (yes, really - we're still due to be paying some of it in the 2060s). So that makes any suggestion that the same money would be available to spend as a big juicy Brexit dividend instead utter nonsense, because there was never a £39 billion lump-sum at all.

D) Tim Martin is an astute businessman who runs a very large chain of pubs with a decent degree of success. That doesn't mean he knows anything about the WTO (he doesn't) or the intricacies of international trade and trade agreements (he doesn't), or tariffs (he doesn't), or the needs of the industrial sector and just-in-time production (he doesn't) or the specific legal consequences of a no-deal Brexit (he doesn't). His skillset doesn't map onto Brexit, much like a brain surgeon might be an absolutely diabolical plumber.

Unfortunately, what his own narrow business success has given him is a soapbox, and plenty of money to slosh around to amplify his mistaken and/or misleading Brexit information. It must be nice to be able to afford to print new leaflets every week with your favourite anti-EU rants in them, regardless of the fact that very little if any of what they say is factual or true.

Not paying debts is a Donald Trump manoeuvre. It works pretty well in a big city with tens of thousands of properties and potential business partners to work with. When there are only about 180 countries, but 3 trading blocs (China, EU, USA) have 75% of the world's wealth, shafting any one of those big partners really screws yourself over if you're a rich country who still needs wealthy customers to buy your stuff.

Legally no, we don't owe them a penny.

As demonstrated by the House of Lord's enquiry into such.

I'd say that chances are May will bung them some cash anyway as the amount's they are set to lose from their budget are rather large. some excuse such as staying part of some of the bodies affiliated with the EU.

On top of our £20 billion 'contribution' there is also £2+ billion in VAT and £12+ billion in tariff income per year to consider.

Can you link to that report, please, Spinflight?

publications.parliament.uk/pa/ld201617/ldselect/ldeucom/125/125.pdf#page=5

"However, the strictly legal position of the UK on this issue appears to be strong.
Article 50 provides for a ‘guillotine’ after two years if a withdrawal agreement
is not reached unless all Member States, including the UK, agree to extend
negotiations. Although there are competing interpretations, we conclude that
if agreement is not reached, all EU law—including provisions concerning
ongoing financial contributions and machinery for adjudication—will cease
to apply, and the UK would be subject to no enforceable obligation to make
any financial contribution at all. "

{Legally no, we don't owe them a penny.}
I wonder why Theresa signed off on that several months back, agreeing to the (approx) £39 billion.
£39 Billion is not a massive amount when you look at the EU total spend.
The EU 'bank account' had reserved something like €1 Trillion for 'Brexit disruption', although they would prefer to spend it on welfare of the EU citizens.
There is also the small issue that if the UK refuses to pay what they owe for ongoing projects they signed up to, there is no way that other countries will offer the UK 'credit'.
You also have to remember that the whole world (well those people that trade outside their own environment) are watching what the UK does, so sneaking out without paying will be noticed.

"The EU 'bank account' had reserved something like €1 Trillion for 'Brexit disruption',"

The EU's annual budget is less than 1/6 that.

"although they would prefer to spend it on welfare of the EU citizens."

The EU doesn't spend a penny on that.

"There is also the small issue that if the UK refuses to pay what they owe for ongoing projects they signed up to, there is no way that other countries will offer the UK 'credit'."

The moment we voted to leave the UK became considerably more credit worthy. By over 100 basis points.

"You also have to remember that the whole world (well those people that trade outside their own environment) are watching what the UK does, so sneaking out without paying will be noticed."

The world thinks we are bonkers for offering £39 billion for less than nothing.

Spinflight
{The world thinks we are bonkers}
Is the nearest bit to accuracy in your last post.

Part of the £39 Billion is to cover commitments that the EU in partnership with the UK have made jointly.

{The EU doesn't spend a penny on that.} Probably true, as it is a 'contingency plan' rather than current expenditure, however it has to come from somewhere so someone's tax has paid for it.

We have pension commitments (EU citizens who lived here & pension payments into foreign systems made by UK citizens who lived in EU). And there are mutual health insurance commitments. The £39bn is partly to fund those mutual arrangements. UK would be shafting its own citizens to renege.

When people talk with pride about "Great British Values" (often describibg attributes that are common to all decent people worldwide), I wonder if they include honouring commitments already made. Can't understand how reneging on multiple international treaties fits into that narrative of the English Gentleman.

Well if the UK does renege on the divorce settlement
if hope that Nigel Farage and his family personally lose out on their pensions
as do all of the UKIP MEPs
because those pensions are part of the settlement.

spinflight thanks for the link.

My reading of it is there may be no legal reason to pay some of it, but if we don't we'll be deemed as trustworthy as Burkina Faso.

Which is not a great basis for recalibrating your economy once you've cut ties with a trading block as big as the EU.