(Bloomberg) -- Trade Secretary Liam Fox rejected as “absurd” the suggestion that the U.K. should be charged for leaving the European Union, setting the stage for an early fight in the upcoming Brexit talks.
His comments came after former British envoy to the EU, Ivan Rogers, warned lawmakers of the “genuine” risk the U.K. will be handed over a divorce bill of as much as 60 billion euros ($65 billion) as talks drag on until the early to mid 2020s. Fox appeared to reject this possibility outright.
Liam Fox
“The U.K. is using a legal power under the Lisbon Treaty freely entered into,” Fox told a separate parliamentary committee on Wednesday. “Why should they then turn around and say we should pay?”
Haggling over such a bill could set an early tone for the Brexit negotiations and shape the final deal. If the British disagree on paying, or on the amount, then the EU could retaliate by delaying talks over the U.K.'s future trading relationship with the bloc or the market-access it's willing to offer.
Rogers, who described himself as a “budget bore,” told the House of Commons European Scrutiny Committee that disputes over money will be “an immensely complex part” of the talks as the remaining 27 countries face the prospect of a shortfall in their spending commitments.
Money Talks
“Money will be on their minds,” he said. “The total financial liability as they see it might be in the order of 40 to 60 billion euros.”
Drawing on his experience of dealing with high-level representatives of the EU and its member states until last month, Rogers said “I can see how they get to that figure.” The sum would also include pension liabilities and spending on U.K.-based projects.
An analysis released by Oxford Economics on Wednesday estimated the actual amount should be closer to 47 billion euros, although it suggested the cost to the U.K. would be modest if the payments were staggered. Still, it warned that a flat refusal to pay could trigger legal action by the EU in the International Court in The Hague.
“In practice, the final ‘divorce bill' is likely to be closely related to the willingness of the EU to give the U.K. a favorable trade deal,” wrote economist Martin Beck.
Post-Brexit Tariffs
Fox also said the U.K. won't push up tariffs after it leaves the EU. He promised to pursue an agenda of free trade, including opening a dialog with the U.S.
It would be “against Britain's national interests” not to be discussing trade partnerships with other countries in preparation for leaving the EU, Fox said.
May last week held talks with President Trump and said the pair had agreed to move forward with plans for a new U.K.-U.S trade agreement. Fox said British ministers and U.S. officials could begin talks in the next few weeks.
Rogers left lawmakers in no doubt about the difficulties that lie ahead.
“It's a negotiation on a scale that we haven't experienced probably ever, but certainly since the Second World War,” Rogers said. “This will be an unprecedentedly large negotiation.”
--With assistance from Thomas Penny To contact the reporters on this story: Tim Ross in London at tross54@bloomberg.net, Alex Morales in London at amorales2@bloomberg.net. To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Flavia Krause-Jackson, Simon Kennedy
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
