With the UK-EU negotiations rumbling on in Brussels, this week's Chart shows the range of likely scenarios that the ICAEW has modelled for the exit charge.
The softening in tone from Downing street following the Prime Minister's speech in Florence last week, leads us to the conclusion that the 'high' scenario now appears to be a more likely outcome. The speech proposed that UK would seek a transition period after the UK’s departure from the European Union on 30 March 2019. This should run for a period of at least 21 months until the end of 2020, covering the remainder of the EU’s 2014-2020 multi-year financial framework (MFF).
The statement that no country would pay more or less towards the EU Budget indicates that the UK now expects to contribute to the EU on the same basis during the transition period up until the end of 2020 as if it had remained a member. It also implies that the UK has accepted that it will need to contribute towards spending authorised before 2020 that will be paid out in the years after 2020. For example, for years 4 to 10 of a ten-year research grant authorised and starting in 2018.
Our Chart of the Week comes from our report ‘Analysing the EU exit charge’, which sets out the different components of the exit charge in a short digestible summary document. It can be found at: http://www.icaew.com/technical/economy/brexit/analysing-the-eu-exit-charge.
One question not yet answered is how much the UK will need to contribute for a longer transition period that extends into 2021 or further, nor to the financial arrangements in order to participate in EU agencies and programmes in the longer-term. So even if both sides can wrap up a deal on the exit charge soon, there remain several more financial negotiations to conduct in the months to come.
Of course, as we all know when it comes to negotiations - nothing is agreed until everything is agreed!