The joint report on progress during phase 1 includes a deal on the financial settlement
Picture credit: European Union, 2017/ Photo: Etienne Ansotte
The financial settlement includes payment into the EU budget until 2020 and maybe beyond
The deal, agreed by the European commission and the British government on Friday 8 December, foresees that the UK will honour its financial obligations to the EU budget until 2020, and leaves open the possibility to continue contributing to the EU budget and the European Investment Bank.
“Under the caveat that nothing is agreed until everything is agreed, the joint commitments set out in this joint report shall be reflected in the Withdrawal Agreement in full detail. This does not prejudge any adaptations that might be appropriate in case transitional arrangements were to be agreed in the second phase of the negotiations, and is without prejudice to discussions on the framework of the future relationship.”
In the end, the financial settlement was the least controversial issue between the UK and the EU to find agreement. After prime minister May’s Florence speech, where she had made the commitment to honour its financial commitments, the path was relatively clear.
The joint report does not mention a specific figure that the UK would eventually have to pay to the EU to honour its obligations.
However, there is agreement on the components, the principles to calculate the value of the financial settlement and the payment modalities, and on the UK’s continued payments into the multiannual financial framework (MFF) until 2020.
The payments shall be made in euros, and the UK will contribute to the EU annual budgets in 2019 and 2020 “as if it had remained in the Union”. The UK will also finance its share of any outstanding budgetary commitments at 31 December 2020 (reste à liquider). The UK will keep on paying pensions and other post-employment benefits for EU staff and some staff agencies.
The UK will receive its shares of the paid-in guarantees to the budget.
However, there is as yet no agreement on union space programmes (EGNOS, Galileo & Copernicus). The report states that:
“The UK’s past contribution to the financing of space assets could be discussed in the context of possible future access to the services offered.”
The UK will continue to pay into the multiannual finanical framework until 2020, but also be able and eligible to participate in EU programmes until they close. Participation in such programmes will require the UK to respect all relevant Union provisions including co-financing.
Point 73 notes that:
“The UK states that it may wish to participate in some Union budgetary programmes of the new MFF post-2020 as a non-Member State.”
This raises the possibility for the UK to continue benefiting from EU research grants and collaborations.
The UK government has also offered to help with the moving costs of relocating EU agencies from London to the EU.
European Investment Bank
The EIB has been given a guarantee that its stock will not decrease as a result of Brexit.
However, the UK will be reimbursed its share of the paid-in capital in 12 annual installments starting at the end of 2019: the first 11 will be €300,000,000 each, and the final one will be €195,903,950.
UK projects will not be eligible anymore for new operations from the EIB which are reserved for member states after it withdraws.
The UK has however indicated that it considers there would be mutual benefit from a continuing arrangement the UK and the EIB, which should be discussed in the second phase.
The UK has also pledged its financial commitment to the Facility for refugees in Turkey and the EU emergency trust fund, with the caveat that this may change in the second phase of the negotiations. The same applies to the European development fund.
Several separation issues have not been resolved and postponed to the second phase of negotiations.
There has been no agreement on continuing the application of Euratom treaty in the UK, which sets uniform safety standards and provides supervision. The UK will be responsible for international nuclear safeguards in the UK and should implement a regime that is similar to Euratom arrangements.
On ongoing EU administrative proceedings, there is also no agreement related to competition, state aid and examinations of the Community Plant Variety Office.