Billions the UK owes EU a ‘bear trap’ for Ireland
Associate research professor at the Economic and Social Research Institute, Edgar Morgenroth, said the UK owes many billions to the EU institutions, including a bill to cover the pension contributions for EU civil servants, and it would be difficult to see how a “eurosceptic” UK parliament would endorse sending a large cheque to Brussels.
By not sending the money, bitter trade talks would be the likely outcome which would lead to a trade deal between the EU and the UK that was not in Irish interests, Mr Morgenroth told the Irish Examiner.
“People are jumping ahead — to do a trade deal needs a sensible negotiation,” said Mr Morgenroth. “How do you do a trade deal with a country that has not paid its bill?
“It is a big thing because there is a big liability with the pension fund for the former EU civil servants for example — the UK has a share in that liability and it will have to pay up for that.
“Whether it pays up front or some other way it will have to be done by a binding international agreement. It will be a large amount of money. I don’t know whether it would strengthen Brussels’ hand but there are nasty bear traps.”
As a member of the EU club, the bill would cover the UK’s hefty share of any liability the EU holds across its institutions and with the rest of the world. Estimates of the amount the UK owes Brussels has varied from €20bn to over €50m.
Mr Morgenroth said the UK’s hard Brexit policy, as outlined in prime minister Theresa May’s speech on Tuesday, was the “logical outcome” of the rhetoric emerging from London since last September.
Many people had played down the worst outcomes for a long time, he said, and it was now “imprudent” to continue to do so.
“The prudent thing to do is to plan for the worst and hope for the best” as the worst fears of a hard Brexit have been realised, said Mr Morgenroth. Tuesday’s speech has “burst that bubble for most but not all people”, he added.
Most experts agree that the Irish agri-food industry in particular would be harshly affected as the UK abandons a customs union and embraces a hard Brexit because the tariffs imposed outside any trade agreement on unprocessed food can be huge under World Trade Organisation rules.
Boneless fresh meat is subject to stringent tariffs – on average a 45% tariff under WTO rules, said Mr Morgenroth.
Meanwhile, Britain’s car industry is a key part of the economy and the UK government is looking to ensure the best possible EU market access for all of the country’s important sectors, Ms May’s spokesman said yesterday.
The chairman of Japanese carmaker Toyota told the Financial Times earlier this week: “We have seen the direction of the prime minister of the UK, [so] we are now going to consider, together with the suppliers, how our company can survive.”
Asked for a response to the comments, Ms May’s spokesman said: “The automotive industry and the finance sector ... are key areas for us and we will be, as we go into the negotiating period, looking at how we can ensure the best possible access to the European market for our key sectors.”
