UK 'not legally obliged' to pay Brexit exit bill, say peers

Credit: PA

The UK could legally walk away from the European Union without paying anything if there is no post-Brexit deal, a House of Lords inquiry has concluded.

The Lords EU Financial Affairs Sub Committee said Britain would be in a "strong" legal position if the two-year Article 50 withdrawal negotiations ended without an agreement.

But it warned failure to reach an agreement on financial terms would undermine the Government's aim of securing continued favourable to access to EU markets.

We conclude that if agreement is not reached, all EU law - including provisions concerning ongoing financial contributions and machinery for adjudication - will cease to apply, and the UK would be subject to no enforceable obligation to make any financial contribution at all."

However it cautioned that this "would also damage the prospects of reaching friendly agreement on other issues"

"Nonetheless, the ultimate possibility of the UK walking away from negotiations without incurring financial commitments provides an important context," the report added.

The Council of the EU and the European Parliament can vote on the final deal. Credit: AP

It has been reported that the European Commission's chief Brexit negotiator Michel Barnier is seeking a 60 billion euro (£52 billion) "exit bill" from Britain.

But the committee said all estimates of the cost of withdrawal were "hugely speculative".

EU's chief Brexit negotiator Michel Barnier. Credit: PA

Although some member states could seek to bring a legal action against the UK for outstanding liabilities if it refused to pay, the committee said it was "questionable" whether any international court could have jurisdiction.

International law is also "slow to litigate and hard to enforce," the committee's report added.

The sub-committee chairman, Baroness Falkner of Margravine, said: "Even though we consider that the UK will not be legally obliged to pay into the EU budget after Brexit, the issue will be a prominent factor in withdrawal negotiations.

"The Government will have to set the financial and political costs of making such payments against potential gains from other elements of the negotiations."