Committees

Inquiry on UK's financial obligations in the event of ‘no deal' launched

26 July 2019

The EU Financial Affairs Sub-Committee launches an inquiry into the UK's financial obligations to the EU in the event of a 'no deal' in Brexit negotiations.

Based on evidence received, the Committee's report on Brexit and the EU Budget concludes that Article 50 allows the UK to leave the EU "without being liable for outstanding financial obligations under the EU budget and related financial instruments, unless a withdrawal agreement is concluded which resolves this issue."

However, it also warns that the political and economic consequences of doing so would be "profound" and notes that the EU may well demand a financial contribution before agreeing a preferential trading relationship, as well as a transition period.

Giving the increased possibility of a 'no deal' Brexit, the Committee is revisiting the issue of the UK's financial obligations to the EU, focusing in particular on the possible consequences of the UK deciding not to pay. This involves considering the enforceability of the UK's financial obligations to the EU, the likely political response from the EU, and the implications for UK organisations that currently receive EU funding.

Focus of the inquiry

The Committee seeks evidence on the following topics in particular:

  • What are the different scenarios under a ‘no deal' Brexit and how could these affect the UK's financial obligations to the EU?
  • What is the status of the UK's financial obligations to the EU, and the EU's financial obligations to the UK, in the event of a ‘no deal' Brexit?
  • How do the UK's financial obligations to the EU in a ‘no deal' scenario compare to those agreed under the draft financial settlement?
  • How have the Article 50 extensions affected the value of the UK's financial obligations to the EU? How could any further extensions affect this?
  • If no agreement is reached with the EU, how would the UK's financial obligations be legally enforced? Under which court's jurisdiction could such a case be considered?
  • What would the political consequences be of the UK and EU failing to reach an agreement on their mutual financial obligations?
  • How would UK organisations currently receiving EU funding be affected in a ‘no deal' scenario?

Chairman's comments

Lord Sharkey, Chair of the EU Financial Affairs Sub-Committee, said:

"As the prospect of a ‘no deal' Brexit appears to be increasing by the day, it is vital that there is greater clarity over such a scenario would mean for the UK's financial obligations to the EU.

"The Committee will consider how questions over the UK's payment of any obligations could be decided and enforced, as well as what the consequences of any decision to leave the EU without an agreement on a financial settlement.

"We encourage, and welcome, submissions of written evidence from anyone with knowledge of and an interest in these issues."

Timeline

The deadline for written submissions is 28 August 2019

Further information