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Brexit Divorce Price Tag Still Unknown, Auditors

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Brexit’s divorce bill’s total cost still has yet to be determined, said an auditor.

There remain far too many future events which much occur before the complete price can be tallied.

The Cost of Divorce

The National Audit Office explained that the government’s estimate of between £35 billion and £39 billion is “reasonable.” However, it also pointed out that “relatively small changes” to issues such as the exchange rate, inflation, or the country’s future economic performance could send that cost higher or lower.

The government has promised that it would be “fair to U.K. taxpayers” with the settlement and that its commitments would be honoured.

There is already less than a year before Brexit occurs. The country is due to begin its “transitional” period on its way out of the European Union at the end of March 2019. That transition will continue until 31 December 2020, at which pint the majority of the present trade agreements are expected to be maintained.

The U.K.’s Biggest Liability

The United Kingdom has agreed with the European Union to continue to pay into the annual budget until December 2020. Moreover, it has also agreed to cover a portion of the E.U.’s outstanding commitments and liabilities at that time.

That said, the country’s biggest liability is the E.U. officials’ pension scheme. That bill, on the other hand, is one the United Kingdom will be continuing to pay until at least 2064. Still, by 2021, around 60 percent of the country’s financial settlement is forecasted to have been paid off.

A “Reasonable Central Estimate”

Chancellor Philip Hammond has laid out what he refers to as a “reasonable central estimate” for the divorce bill’s value. The government has used that prediction of £35 billion to 39 billion. That said, the U.K. and E.U.’s joint report from December 2017 did not mention any specific final total.

However, the National Audit Office explained that it was far too early to be able to come up with such a specific total. It stated that “until there is greater certainty around future events,” an accurate Brexit divorce bill total would be unavailable.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.