The Office for Budget responsibility (OBR) has said that not only will the UK save no money from Brexit for the first five years but that it could also end up paying its Brexit divorce bill until 2064.
This is of course being put forward by some as the UK being forced to pay Brussels for 45 years after we have left the bloc. And it could lead people to ask: if that’s the case, is it worth leaving?
It all does sound rather alarming until you look at the payment profile that the OBR has constructed showing how those payments are broken down year by year from now until 2064.
The OBR has estimated that the total cost of the so-called EU divorce bill will be £37.1 billion. Admittedly it is working on Treasury assumptions and the OBR does say that while there is now sufficient clarity to estimate the costs, the UK public finances will be effected by many indirect factors and says in Annex B of its March 2018 Economic and Fiscal Outlook:
"Such effects are impossible to quantify now, since there is no meaningful basis upon which to predict the precise end-point of the negotiations that are underway."
But overall it would I think be safe to assume we are definitely in the right ballpark.
Cutting to the chase, chart B.3 in the report shows the OBR's assessment of the annual path of financial settlements with the EU.
As you can see, the initial years to 2024 or thereabouts are very heavy in payments constituting some 75% of the total owed, something that the UK public has been prepared for.
But then they tail off markedly until 2064.
"The path of payments after the final RAL-related payments averages around €150 million a year, with a small number of years seeing receipts from returning assets exceed payments linked to pensions. This would be equivalent to 0.004 per cent of GDP a year." says the OBR.
It is also not beyond imagination that the UK and EU could reach a final settlement about those tail-end payments in order to bring the whole thing to a swift conclusion.
