‘Biggest Ever’ EU Budget Overhang Casts Shadow on the Brexit Bill

On Thursday, the EU auditor said that in 2016, the extension of delayed payments that are yet to be made from the European Union budget reached its highest ever level highlighting an ominous turn as Britain deals over its Brexit bill.

The 28 current member states, which includes Britain, committed to paying almost 1 trillion euros (892.59 billion pounds) over the current EU budgetary period which is between 2014 to 2020. However, delays in some of the projects and programmes that draw down those funds imply that a hefty 239 billion euros remain unspent.

This overhang, which is known by the French term “reste a liquider” or RAL, pushes into the next seven-year budget. However, Michel Barnier, the EU Brexit negotiator stated that Britain is refusing to settle its bills beyond 2020. Prime Minister Theresa May made that compromise to pay beyond Brexit in March 2019 last Friday during a speech in Florence aimed at unblocking talks.

Barnier insists that Britain will owe a share of all outstanding obligations that the European Union has entered into while Britain was still a member. A number of those obligations may not be paid out for years.

The European Court of Auditors, publishing its annual report on Union finances, warned that “the total payments the EU is committed to making from future budgets were higher than ever”.

It prompted officials to prioritise clearing the backlog, which stood at 217 billion euros at the end of 2015. However, it rose by 10 percent over the course of 2016.

Calculating a British share of the “reste a liquider” could be one of the hardest tasks for negotiators. Normally, Britain has contributed around 15 percent of the European Union’s receipts. Brussels has estimated that the total “Brexit bill” could be around 60 billion euros — a figure dismissed by the government of May as outrageous.

Part of that amount, which will fall due in March 2019, would include around 20 billion euros for the 2019 and 2020 budget years. However, if Britain stays in the single market for a transition over that period, it may not have to pay those amounts immediately.

However, the European Union will still want Britain to pay a part of the “reste a liquider” beyond 2020, as well as funds to cover other obligation including the future pensions of European Union staff who have earned pension rights during the by then 46 years of British EU membership.