Principles
The UK committed to honouring its share of gross EU liabilities accrued while Britain was a member state. An important objective of the first phase of the Brexit negotiations was to determine how to calculate the financial settlement.
As the Attorney-General stated in Parliament on 15 January 2019, the UK had an international legal obligation to pay what it owed to the EU. Indeed, the Withdrawal Agreement (which covers the financial settlement) was legally binding.
The UK and the EU agreed to a system to pay in instalments as specific liabilities fall due. This means that the final figure for the so-called “Brexit bill” will not be known until the final liabilities fall due in 2065. However, most of it has already been settled.
Calculation
£23.8 billion was paid by December 2023 (just under 80% of the latest total Treasury estimate). This left about £6.4 billion outstanding which is being paid in relatively small annual payments until 2065.
The Treasury’s 2024 estimate is summarised in Table 3.3. The main component is the UK’s share of unpaid spending commitments in the 2014-20 financial plan. In addition, there are other obligations such as pensions and contingent liabilities related to decisions taken while the UK was a member, including guarantees for outstanding loans from the European Investment Bank (‘EIB’).
In March 2024, the Treasury estimated that the net overall cost of the settlement was around £30 billion which was lower than previous estimates:
- In 2017, using the UK’s share of EU contributions of about 13% implied a gross liability of about €100 billion (see FT article), or net €48 billion to €54 billion after deducting the UK share of EU assets (€17 billion to €23 billion) and the EU’s spending commitments to the UK until 2020 (€29 billion).
- In 2018, the government estimated the net financial settlement would be £35 billion – £39 billion.
- By 31 December 2020, the outstanding financial settlement was estimated to be ~£34 billion.
There are some remaining uncertainties about the final figure. The latest government estimate (released in March 2025) of the amount outstanding was £5.7 billion as at 31 December 2024.
| Table 3.3: Financial settlement | £ billion | £ billion |
|---|---|---|
| UK participation in EU annual budgets to 2020 (net) | 8.9 | |
| Reste à liquider (commitments): 2021-2026 | 20.5 |
|
| Other net liabilities: 2020-2065 | ||
| Pensions | 7.5 | |
| EIB paid in capital | -3.0 | |
| Other | -3.7 | |
| 0.7 | ||
| Total: 2020-2065 | 30.2 | |
| Paid up to December 2023 | -23.8 | |
| Outstanding at March 2024 | 6.4 |