The European Union wants the UK to settle the divorce first before going for a new trading relationship. Considerably, the Brexit divorce settlement risks the Britain’s Prime Minister Theresa May advantageous position.
17 March, AtoZForex – As AtoZForex has already reported, the British government will have a new act of Parliament signed into law this month. The UK Prime Minister Theresa May who wants to create a “more united” Britain will be able to work more aggressively on Brexit following this act. It is still uncertain how Brexit divorce settlement risks Theresa May advantageous position.
How Brexit Divorce Settlement risks May position?
Theresa May appears to be very confident about her goal to make the Britain independent and self-governing globally. Considering the opinion polls where her Conservative Party is 19% ahead, it may be easy to go on her pursuit of a hard, clean Brexit. On the contrary, the unity of EU leaders will make it harder for the UK on Brexit divorce settlements.
Most of the EU leaders from Berlin to Brussels are coming on the same page regarding their talks as per the documents. Moreover, they all want to make sure that it costs more for the UK on tearing itself apart. The European Union will pull back from allowing any further grants to the Britons according to Germany. Furthermore, Denmark warns that it could take more than 15 years for the UK to have a free-trade agreement with the Europe. In addition, taking the side of its EU partners, Ireland signals that Britain will have to pay an exit fee.
How much the UK owes to the EU?
Michel Barnier, a chief Brexit negotiator, suggests the Britain pay €60 bn ($64 bn) in order to cover the rest of the EU’s debt. However, the UK government has settled off this proposal of the chief Brexit negotiator. Pensions for European officials, infrastructure projects’ commitments, and financial plans like Irish bailout are the UK’s liabilities as per Barnier.
Barnier’s bill was considered as “absurd” by one of Theresa May’s senior ministers. On the other hand, a former Chancellor of the Exchequer Nigel Lawson described it a “ransom demand”. Ireland’s Prime Minister, Enda Kenny, informed that Britain will need to pay to the EU for its commitments done previously. Kenny told reporters:
“When you sign on for contracts, you commit yourself to participation, and obviously the extent of that level of money will be determined.”
Furthermore, Barnier insists on discussing a free-trade agreement only after the UK confirms to pay. Also, Germany agrees with Barnier stating that the settlement for the divorce should be done first. Only after this, they can proceed to a new trading relationship. Commenting about the Scotland’s demand for an independence referendum, Mujtaba Rahman, managing director at political consultant Eurasia Group, said:
“This is about as good as it gets for May. Politics are about to get decisively more difficult.”
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