Although Britain is set to leave the EU in March 29, 2019, it has agreed to pay its share of debts and liabilities assumed by the EU until the end of 2020.
According to EU data released on Thursday, Britain’s contribution to the EU budget is likely to go further due to rising costs and financial guarantees. This will be applicable even after it leaves the EU on March, 29, 2019.
Under a draft agreement reached by Britain with its EU partners in March 2018, Britain will honor liabilities and debts assumed by the EU until the end of 2020.
According to its own estimate, the Brexit bill is likely to cost Britain 39 billion pounds.
New EU data shows, debts are set to rise, thus Britain’s cost of shouldering these debts is likely to rise further.
In a report released on Thursday, the European Court of Auditors (ECA) stated the EU’s pension liabilities have touched $84.29 billion (73.1 billion euros) in 2017 from a previous estimate of 67.2 billions euros.
EU states contribute to the common budget in proportion to their economic output.
As per Klaus-Heiner Lehne, the president of the court, it is not possible, at this juncture, to calculate the final cost Britain will have to pay for the Brexit will since the terms of Britain’s agreement with the EU along with the financial figures could undergo change as divorce talks enter their crucial phase before March 2019.
Further, the Brexit bill could inflate further by “contingent liabilities”, which essentially are EU guarantees on investment projects.
In 2017, these have increased to 123 billion euros, up from 115.3 in 2016, said the ECA in its report.
Britain has accepted to pay all of its EU liabilities covering financial operations agreed before its departure from the EU.
However, auditors have pointed out that these liabilities may in fact never be triggered if loans are recouped and if projects that have been funded turn out to be successful. In the best case scenario they could also generate profits.
In addition to these possible extra financial and pension payments, which Britain will have to sustain for many years after Brexit, EU states are required to pay the money they have committed to the EU budget by 2020.
Britain has committed to pay 6.3 billion euros into the EU 2014-2020 budget but has so far disbursed only 1 billion euros.
Auditors warned that delays in spending and approval of EU projects had pushed up outstanding commitments to the record level of 267.3 billion euros last year.
This unspent money committed by EU states could be called in before 2020, forcing governments to make large payments in a short period, auditors said, cautioning that not all money might be available when needed because of this backlog.
Under EU rules, money could be paid up to three years after 2020, once spending projects are approved. Projects funded in Britain could also benefit from these funds.