According to the government’s independent budget watchdog, the Office of Budget Responsibility (OBR), the UK is unlikely to save any money from leaving the EU over the next five years. They said that we could be paying the Brexit divorce bill until at least 2064.
This estimate comes after Theresa May agreed to a financial settlement in December.
The OBR highlighted that government spending up until 2023 would have been the same if Britain had voted to remain in 2016. The financial settlement to leave the EU and the replacement of European funding in the UK will cost around the same as full membership would.
Total costs
After the chancellor’s spring statement, the OBR said that they expect the total settlement to leave the EU to be £37.1 billion.
This appears to be in line with the figure previously quoted by Theresa May of between £35 billion and £39 billion.
One of the main reasons for the payments is the UK’s share of €76.7 billion (£68bn) in EU pension scheme liabilities.
The OBR said that payments could go on until 2064. To put this into perspective, the time frame between the vote to leave and 2064 is around the same length of time that Britain has been a member of the EU.
The OBR predict that the bulk of the payments will need to be made over the next few years and that they’re likely to peak at £10 billion in 2020. After that they will fall sharply to around £300 million every year after 2027.
Other concerns beside divorce payments
The watchdog went further and warned that these costs are not the only things the UK should be looking out for.
They highlighted concerns over lower migration, slow productivity growth and a general economic slowdown. The also said that a higher inflation rate due to the fall in the pound will likely lead to the government borrowing about £15 billion a year more by 2023.
What do you think of these warnings from the OBR? Do you agree with their predictions? Please leave your thoughts in the comments section.