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13 October 2016

Bad news: the cost of Brexit is bigger than you think

And that's simply the best-case scenario.

By Stephen Bush

Another day, another mind-bogglingly large number about Brexit. The FT’s George Parker and Alex Barker have put together the price tag for the UK’s “divorce bill” from the European Union: and put it at around €20bn. “UK faces €20bn Brexit divorce bill in Brussels budget wrangle” is the FT’s splash.

The bill is a combination of pension contributions and spending projects already underway or approved across the bloc. And the really bad news? Some in the 27 nations of the European Union and the Commission are keen to push for Britain to honour its commitments until 2020, when the budget approved by the UK when it was still a participating member of the bloc expires.

But the counter-intuitive thing about all this is in many ways this is, as far as the government is concerned, the best news to come out about Britain and Brexit for some time. Why? Well, as I’ve written before, there’s a hope near the top of government that money might be the key to reconciling all of Britain’s Brexit objectives.

There’s a view that the Out vote had three drivers: opposition to immigration, a desire to re-establish British sovereignty, and unwillingness to fork over money to Brussels. Or, to put it in the language of Vote Leave: fear of a Turkish horde, taking back control, and finding £350m extra a week for the NHS.

The PM has already set out that Brexit means Britain must have control of its own borders and will not be subject to the European Court of Justice. But she’s been noticeably quiet on that £350m a week. At the top of Whitehall, there has been serious study of the Norway grants, which go not just to Brussels but to individual member states.

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All of which means that forget €20bn being settled by 2019, 2023 or even 2030. That just’s the cost of the divorce. The maintenance payments are likely to be far higher than that.

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This – along with all the political news you need to know – appeared in today’s Morning Call newsletter, my free morning briefing about what’s going on in Westminster, Whitehall and beyond. Get it in your inbox for free here.