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Brexit: issue illiteracy

2016-12-16 13:41:36

Having been ignored by the legacy media for far too long, the possibility of the UK having to pay a substantial "termination fee" to the EU is gradually creeping up the news agenda. Latest on the scene is the Telegraph with a front-page lead story headlined: "Britain will be handed 50bn exit bill by EU when Theresa May triggers Article 50, chief negotiator for Brussels warns".

The headline is a reference to Barnier, but never mind that he may or may not be the chief negotiator depending on what the European Council decides once Article 50 is triggered.

Of more immediate relevance is the claim that Barnier is suggesting that the UK will be presented with a 50 billion "exit bill" by the European Union as soon as Theresa May triggers Article 50. The bill, we are told, would include the UK's "share of outstanding pensions liabilities, loan guarantees and spending on UK-based projects".

Examination of the article text, however, would seem to indicate that the Telegraph has no documentation to support its claim. Typically, it is relying on second-hand verbal reports from unspecified "EU leaders", and in particular a Sky News interview with Tomas Prouza, the Czech Republic Europe minister.

But those who have been following EU affairs and Brexit with any diligence will know that this possibility is not news. We raised it in April, before the referendum, pointing out that there could be a reste liquider (RAL) commitment that could run to about 30 billion.

With other potential liabilities, there was enough substance in the issue for Booker to report in August that we could not discount the prospect of the UK paying more into the EU budget after Brexit than we are at the moment.

What was an exclusive analysis in EUReferendum.com, at a time when Vote Leave's notorious bus was proclaiming savings of 350 million a week was, of course, ignored by the legacy media. And even though Booker had published what amounted to a world exclusive in his column, that was only the Booker column in the Sunday Telegraph. It too was ignored by the Telegraph Group and the media in general.

We had produced a Monograph on the issue in July, which was ignored by the media, and by the Treasury select committee which was given a pre-publication copy.

At the time, the only response we got from inside the bubble was from Peter Lilley. He wrote that, "no convincing case" had been made for the liability to pay RAL which is hardly surprising. We had raised it only as a possibility, based on our knowledge of the system and our reporting in 2013, and again in 2014, relying on the excellent Euractiv. These reports had also been ignored by the legacy media.

Even a report in the German press last August didn't invoke much interest and it was not until the Financial Times started sniffing around the issue, in its own self-important way, that the media in general started to wake up.

But now, after all this time, the story has been "discovered" by the Daily Telegraph from watching Sky News. Only now does it become front page news in that newspaper. As might be expected though, with limited technical background and even less competence, the Telegraph is getting the important detail wrong. Although a dumbed down newspaper couldn't possibly mention reste liquider, it is clear from the context of its story that that is what is involved.

In the nature of RAL, though, the amount committed can only be calculated at the end of the MFF period, with this one finishing at the end of 2020. Thus, the EU has no means of knowing the what sums are involved until then and, in any event, the payments only become due progressively through the following MFF period.

On that basis, there can be no question of Barnier or anyone else handing the UK a 50 billion exit bill when Theresa May triggers Article 50. This is issue-illiteracy of the highest order. It simply isn't going to happen.

The main interest of the paper, though, seems to be to use what amounts to a very thin and derivative story to give a platform to squealing right-wing Tory MPs. They have, according to the Telegraph, "refuted the idea of paying such a bill". And that is just plain illiteracy.

Iain Duncan Smith, has said the figure is a "dreadful joke" and that the true amount will be "peanuts". Dominic Raab comments: "Good luck with that. I'm not sure Monsieur Barnier has quite mastered the art of expectation management, but it's good to know he's got a sense of humour".

Sadly, whatever the huffing and puffing from the Tory benches, there is no humour to this issue. The likelihood remains that we are going to be paying a considerable amount to the EU before we are finally clear of its embrace.

In all probability, we will have to meet budget commitments to the end of the current MFF and then, from 2021 onwards, we might expect tapering payments which include RAL and other amounts yet to be negotiated.

The things that we can be sure about are that such payments will form a prominent (and time-consuming) part of the Article 50 negotiations and that, by the time we reach an agreement, the Vote Leave claims of savings from Brexit will be even more or a laughing-stock than they are now. But it won't be humorous laughter.