The EU demands the UK pay Brexit costs of €60 billion.
I have commented for months on the absurdity of pay such demands.
And that reality is finally hitting home.
Collision Course
Please consider U.K. May Be on Course for Early Clash With EU Over Brexit Costs.
U.K. Prime Minister Theresa May’s government looks set for an early clash with European Union leaders over the terms of Brexit as a report suggested it can leave the bloc without paying a financial settlement.
The Times newspaper on Saturday said government lawyers concluded there is no law or treaty to compel the U.K. to pay the bill EU officials have estimated at about 60 billion euros ($64 billion). That echoed a newly published finding of a House of Lords committee.
“Even though we consider that the U.K. will not be legally obliged to pay into the EU budget after Brexit, the issue will be a prominent factor in withdrawal negotiations,” Committee Chairwoman Kishwer Falkner said in a statement. “The government will have to set the financial and political costs of making such payments against potential gains from other elements of the negotiations.”
Haggling over how much Britain owes appears set to provide an early test of the formal negotiations, which May has pledged to invoke by the end of March. Austrian Chancellor Christian Kern became the first EU leader to put a value on the bill when he told Bloomberg last month that Britain should be charged about 60 billion euros.
That sparked anger from May’s Conservative Party, with former leader Iain Duncan Smith calling it “nonsense.” Trade Secretary Liam Fox has dismissed the idea of paying anything at all as “absurd.”
Upper Hand
The EU nannycrats have long insisted they have the upper hand in negotiations. The reality is the UK is not obliged to do anything, including a filing Article 50. The UK can tear up the treaty tomorrow and be done with it.
Walk Away
The primary problem in these negotiations is the EU nannycrat fools believe they can force the UK to pay ridiculous exit charges on top of other demands.
The ideal approach for the UK is to simply walk away. What can the EU possibly do that does not hurt the EU even more than it does the UK?
The sooner Theresa May sets the appropriate tone for negotiations the better off everyone will be.
I wrote about this long ago in Brexit Stacked Deck? Which Way? Don’t Negotiate, Just Leave!
Serious negotiations can only begin once Theresa May sets the proper tone. The proper tone is the UK is prepared to walk away and pay the EU nothing.
Mike “Mish” Shedlock
I could not agree more but the government still keep talking about it as a negotiating position that may be worth considering.
I disagree and think a stick is required not a carrot to engage with the Eurocrats in an effort to get a deal we in the UK think is a good deal.
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Just Leave. On a personal scale, that should be the mantra of any family that believes in personal liberty and is being fleeced in a net-marxist state. You have to live with people you share values with – of your own free will.
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That’s exactly why America managed to retain some of its originally intended freedoms, for about exactly as long as there was an open frontier to head for in order to escape the leeches. But of course, the leeches came running hot in trot. Until there were no more frontier left.
Heck, there are people in the Mountain states, Alaska and New Hampshire who insists the process is still continuing, albeit on a vastly truncated scale. With Californians, New Yorkers and Taxachussetians rolling in to set up leechocracies in off beaten path nooks previously not quite as afflicted by their generally unwanted presence.
The possibly somewhat alarming lesson to learn from all this, is that the idea that freedom and utopian “peace” can coexist, is likely an anomaly that is only possible as long as there is an open frontier available. Freedom in less geographically advantaged times and places, will simply have to be fought for and defended. Like the Somalis did, the Zapatistas are still trying to do, and the Afghans have been doing for about ever. And like the US founders, naively it seems looking back, expected their descendants to do as well.
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As an Englishman closer to the action I can state that Theresa May has always been lukewarm at best concerning brexit. In fact, in the run up to the brexit vote she had little to say pro- or anti- and most Brits believe she would have been happy with a yes or a no vote as long as it took her nearer to becoming PM.
She is not a conviction politician, and I don’t see her taking a stand on principle or walking away. She is probably just going with the flow, and hoping the EU self-implodes. Whatever happens her main concern is likely to be consolidating her power, and Britain’s fate is probably only a secondary consideration.
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My take is May had to tow the line else Cameron was in the shit.
Home Secretary is up there with Chancellor (Osborne) and a united front was needed from the 3 main posts – demanded. It was her duty to tow the line but she was less than convinced so kept a very low profile and did not actively campaign to remain. Doing just enough to not show a disunited front.
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Sounds like the EU has adopted the Communist Soviet Evil Empire negotiating techniques of the Cold War. Lie and double down, increase outrageous demands. Oh wait, that was Alinsky the Petty Thief’s followers in Chicago ….
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Your comment reflects the lack of knowledge of how things are connected in EU, to make it easier for you try to imagine the cost of separating TX of U.S, all the crossover infinite connections between citizens and companies with rest of U.S will be severed, of course UK has a debt in most of the sectors and activities with EU.
It has been always a enigma why some of you attacks so furiously the EU when the main benefits of the treaty is the longest period of peace in the most violent and formidable continent in the world. The main objective of EU is political, not economic as your analysis shows.
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Ask yourselves,,,what would Goldman S do?
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Then, place your bets.
Honoring a referendum is like granting the will of the people. No self respecting Machiavellian pol is going to allow that, unless it can be tweaked to become advantageous to his/her/it’s career, and to the special interest entity that put said tools in power.
Yes, it’s all rigged to benefit the “Club.” Absolute power corrupting, and all.
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The EU wants paying in Euros, the contract is in Euros or Euro accounting, but the Euro is no longer the construct it was laid down in law to be. It has been used for political funding even if that funding is proportional, it has been used politically by the imposition of capital controls. I could explain these facets and similar in greater detail and how the meaning of the curency is now void, but the short of it is that it would be morally corrupt for the UK to fund the Euro structure with its own currency.
It would be poor management to place British pounds in the hands of others (ultimately users of the Euro) to purchase Euros to hand over to EU. That would be to place the British at that disadvantage.
It would be a neglect towards the people of Europe who agree with British values, to help support, to recognise via funding, what is known to them as a repressive EU regime .
The arguments run very deep, it is more than money, it is a question of culture and of political recogniton, it is a question of loyalties to concepts of governance and accountability, of solidarity with one or other of the conflicting views that are held by different people in Europe.
So this payment, or demand for payment, is already highly symbolic .
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Just to add insult to onjury, it might be a great idea for the UK to openly start fishing their waters again in open defiance. Le Pen would also get a last minute boost out of it too if played right.
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As I have been pointing out for a year, the UK has all the cards in this negotiation, because the UK has the most important market for EU luxury goods, and the best economy. If the EU loses the UK market, instant depression….If I were Theresa May, I would demand a return of some of the UK funds extorted in the past….
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England has very weak cards. Just ask Scotland
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By now, one must be seeing the glaring similarities between the EU and Somoli pirates.
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“pay the bill EU officials have estimated at about 60 billion euros ($64 billion)”
A “bill” for WHAT exactly?
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I am glad to see your advice is getting traction, Mish. Let’s hope defeat is not snatched from the jaws of victory!
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Good enough to stick on the bathroom mirror for all concerned who should also consider backing away from the “Let’s pretend” EU like Russia who rates it dead in the water, with US weakness perfectly demonstrated by the Fed’s praise of shabby data even after being souped up by young economists implementing hedonics, etc. while Goldman, MS & the IMF with hundreds of economists always get it wrong (but it’s good publicity besides being a CYA for corporate bureaucrats who risk getting fired). Was it you who quoted the very experienced Cmtee CW Kishmer Falkner as saying that the EU Commission would cave in under pressure from EU businessmen who would lose 14% of their exports, leaving the effervescent Theresa May to write her own ticket, resurrecting the Commonwealth & elsewhere without EU interference?
China meanwhile builds a better market in SE Asia with its new infrastructure project joined by
Russia, the UK & Canada but rejected by Obama; It stretches from the Bering Sea to East Africa while China lays claim to the South China Sea with 50% of world shipping passing through the Straits of Malacca, building hunter/killer subs to counter US aircraft cxrs, the Abraham Lincoln having turned tail when the Iranian Persian gulf Commander threatened 2 missiles at the heart of the Attack Boat miasma.
Unlike the days of Mao, Communism backed by capitalism is a powerful force ignored by Western economists as liars in a region of young countries but with $30 Tr of gold & a wealthy middle class which will get wealthier with the Shanghai Gold Exchange. Who, then, are the liars,? Would you put your money on Asia’s youthful populace who have learned that $ are for trading, but gold is for holding? Or with Europe’s ageing countries in the process of disintegration?
It’s time economists were replaced by people who know something about economics.
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EU is like a dishonest, incompetent contractor you can’t get out of your house.
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No matter what part of the world you come from,it is all self interest.
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…and govt has the biggest stick to insure their self interest of perks, power, and sloth.
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Any “exit fee” paid, becomes sunk cost in very quick succession. Both parties are going to make arrangements that benefit themselves going forward. With pretty much zero concern about payments made in the past.
The negotiation dynamic is no different than paying pirates a ransom to “stop hijacking ships.” As soon as the fee is paid, it’s forgotten, and things are back to optimizing arrangements for future benefits.
The best/only thing Britain can do to achieve a good outcome, is to become/remain a place that can provide something the EU needs/wants more efficiently than the Euros can provide it themselves. They should therefore spend any contemplated “exit” money on enabling them to do that instead. Instead of throwing it away on almost immediately forgotten ransoms.
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Here’s hoping the Trump administration opens negotiations soon for a UK-US free trade pact.
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Maybe S&P will threaten another downgrade to scare the British sheeple, like they are doing with France right now. It really doesn’t matter, as Socialism is predictably failing the people and the sovereign defaults will put a nail in the EU and the euro. Why would anyone hand money over to the captains of the Titanic? Global capital flows have told us that money is already leaving the euro for dollar-based assets. If you think stocks are pricey now, wait until the elections in France, Netherlands, and Germany go against the establishment, not to mention the implosions in Greece, Portugal, and Italy.
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They did that before the referendum.
They’ll do it again.
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Article 50 suggests it’s the EUs job to negotiate with the leaving party, not the other way round. I’m not at all sure, if that is the case, how it’s supposed to work.
If they demand 60Bn Euros to leave, what does the leaver get in return they wouldn’t get if they just left without paying or bothering to negotiate when it’s the EU that has the task of negotiating? Does the leaver have to do the EUs job for them?
There have already been predatory acts by EU members against the UK and threats of punishment. How do they anticipate a good negotiation, or any payments, given this behaviour?
I’m all for the UK acting honourably but tempted to suggest not bothering to talk too much, not paying a penny and taking back all fishing controls with immediate repatriation of all EU citizens in UK prisons or unemployed.
Perhaps the article is incorrect. How could the EU demand such a payment if it knows there is no legal requirement on the leaving state to pay anything?
Confused? I am.
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This is something of how it looks within existing legal frameworks
http://www.cer.org.uk/publications/archive/policy-brief/2017/€60-billion-brexit-bill-how-disentangle-britain-eu-budget
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Looks like a typical German influenced negotiating position by the EU – never give an inch (or cm) and make every move a winner. Works fine until it doesn’t because trading partners get fed up. I agree with Mish – the only thing they will understand is NO (nien). Britain is not Greece and is not under the jackboot of the Euro.
The whole negotiating position will change when the Eurocrats realise the enormous loss and instability that can ensue from turning away the GBP – the World’s fourth largest international currency block, the rest is bluff.
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Just tell the EU to get f-cked.
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There will be some legitimate claims the EU may have but surely not to the tune of 60 Billion.
However a claim to fund the portion of pension liabilities of EU employees and those costs directly related to ongoing and committed projects in the UK (assuming that they will be completed) should surely be considered.
For the rest they should get stuffed.
Perhaps the UK could also help fund a special court that will eventually put these morons in the dock. Then we could establish our very own Gitmo for Juncker and his gang somewhere on the Outer Hebrides.
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Does a Brexit mean dissolution of NATO as well?
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