BrexitCentral: Costly EU demands on regulatory alignment could prevent us securing trade deals elsewhere

7 December 2017

Our government on our behalf is reportedly offering to pay the EU around €45-50 billion of money that we don’t legally owe, to submit to our courts being overruled by a wholly foreign court after we have left the EU, and to make commitments keep our regulation in agriculture and possibly other fields “aligned” with the EU in order to resolve the Irish border issue. This is all so that we can reach the nirvana of having not a trade deal, but talks about a trade deal.

It is clear that we do not legally owe these sums to the EU, and indeed probable that in law we have a net credit in our favour (as per this analysis of the UK’s potential financial liabilities by myself and Charlie Elphicke MP).

The fact that we do not owe the money does not necessarily mean that it is wrong to agree to pay some money. I would advise a client as part of a settlement to agree to pay money that is not owed, if the overall benefits of a settlement including achieving a harmonious and beneficial future relationship with the other party, were sufficient to warrant the payment.

But if you are going to agree to pay a large sum of money that you do not owe, you need to look carefully at what is the value of the benefit you will get in return. The benefit is supposed to be the trade agreement that we will negotiate with the EU once we get to the stage of actually talking to them about our future relationship. But no one has actually looked at what the EU will realistically offer in the way of a trade agreement, and demonstrated that it would really be worth €40-45 billion, or indeed that it would be worth paying any money at all for what is on offer.

To read Martin Howe’s piece for BrexitCentral in full, click here.

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