UK Threatens To Quit Brexit Talks Over Excessive 'Divorce Payment' Demands

Tyler Durden's picture

With negotiations between the UK and EU likely to formally begin on June 19, Bloomberg reports that Brexit Secretary David Davis has pre-emptively lashed out at EU officials, threatening that "The UK will quit talks on leaving the European Union unless the bloc drops its demands for a divorce payment as high as EUR100bn."

Britain’s negotiations would otherwise be plunged into “chaos,” and even a 1 billion-pound settlement would be “a lot of money,” Davis said in an interview published in the Sunday Times.

As Bloomberg notes, the size of Britain’s exit bill, and which types of negotiations can begin before it has been agreed, has been a source of debate for weeks.

European Commission President Jean-Claude Juncker has said the U.K. will have to pay about 50 billion pounds, while Luxembourg’s Prime Minister Xavier Bettel has signaled a figure between 40 billion euros and 60 billion euros.


The Financial Times estimated the cost could balloon to 100 billion euros, while a study by the Institute of Chartered Accountants in England and Wales put the cost at as low as 5 billion pounds ($6.5 billion).

Prime Minister Theresa May’s government has said it will meet its commitments to the EU, but has questioned how Brussels officials reached their preliminary estimates... especially the oddly round number of 100-billion-euros...

"We don't need to just look like we can walk away, we need to be able to walk away...Under the circumstances, if that was necessary, we would be in a position to do it."

May also weighed in on the Brexit bill, saying in an interview with the Sunday Telegraph that “money paid in the past” by the U.K. into joint EU projects and the European Investment Bank ought to be taken account in the final sum.

“There is much debate about what the U.K.’s obligations might be or indeed what our rights might be,” she said.


“We make it clear that we would look at those both rights and obligations.”

Cable was lowe rin early trading on the headlines...

But, interestingly, Barclays fears that two years may not be enough time to complete comprehensive Brexit talks...

  • A long road ahead. We believe full negotiations will last much longer than the two years set out for withdrawal. New trading relationships with the EU and the RoW will likelyto be complex and drawn out. As a result, firms are likely to review their operations along the entire value chain, with tariffs only being a small part of their worries.
  • Accordingly, the government should focus on a bridge agreement to avoid a “cliff edge”. The EU also made clear that a new trade agreement can only be finalised once the UK becomes a third country. That will also involve EU27 member-state ratification.


Which leaves three possible paths ahead...The soft, the hard and the ugly Brexit

While it remains unclear what kind of Brexit PM May is seeking, we believe that her insistence on regaining control of borders and withdrawing from the ECJ is fundamentally inconsistent with the EU’s funding principles and makes an exit of the single market unavoidable.

The distinction between soft and hard Brexit will be whether the final outcome is a trade agreement a minima or whether the UK and EU can agree on maintaining some of the deep and comprehensive ties that create economic value.

We believe the final outcome will be one of the following:

A crash Brexit: the UK leaves the EU without any agreement and falls back to WTO tariffs and rules immediately after leaving the EU. Economic consequences would be maximal and disruptive. Such a scenario is likely to crystallise very late in the process but might be delayed or avoided by an extension of talks, which would require a unanimous vote by the EU27.


A soft Brexit : the UK leaves the single market but is able to establish an enhanced partnership with the EU (such as improved equivalence, preferential access, etc) . Under such a scenario, the deviation from the status quo is small and the economic impact, still negative, but largely contained.


A hard Brexit: the UK leaves the single market but is not able to establish an strong partnership with the EU. Although a transitional period could avoid a cliff edge after the actual exit, the negative economic impact is magnified by the fact that businesses must adjust their operations substantially and over a short period of time

While information regarding a soft and hard Brexit will likely be revealed along the way (that is a transparency prerequisite of the Council), a crash exit might only materialise very late in the process as both parties fail to agree on or ratify a final deal.

Europe still faces a very crowded political agenda ahead..

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Full Barclays Presentation on UK Brexit Themes...

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DEMIZEN's picture

a new trade war on horizon.

_ConanTheLibertarian_'s picture

Divorce payments? Fuck off! Just exit and screw the EU.

philipat's picture

Why waste 2 years trying to negotiate with these arseholes when the likely outcome will in any case be "No Deal". Leave now with a middle finger in the air and pay nothing other than those specific items which the UK agreed to share in the funding of and a few other small direct and clearly defined residual obligations. The EU wantsThe UK to fund the hole in the EU Budget for years to come so as to avoid cuts in lavish spending, expenses and ludicrous Eurocrat salaries/benefits

UK industry can manage under WTO Rules and the country could immediately get on with trade deals with ROW.

Ghordius's picture

let's see what is wrong about your comment:

1. it's the UK gov that is asking for a post-Brexit "deal". I repeat: all the "asking" is from the UK, after the divorce arrangement are set. all the "giving" (or not) is from the EU

2. very un-British, that "middle finger". it would be two fingers stuck up

meanwhile, you do realize how biased you sound when you immediately start with that "why waste trying with these arseholes", don't you?

what have these "arseholes" done to you... in Bali? you practically live on the opposite side of the world, philipat. your partisanship is still a wonder, to me

stilletto2's picture

You are right Ghordius. The UK is being positive and asking to discuss continuing the free trade arrangements beneficial to the EU nations and the the UK.  The EU is being negative and refusing to discuss the future and how to preserve and enhance benefits for the EU nations.  Its this pig-headed negativity that is part of the EU culture (not European) that has led to Brexit, and will ultimately lead to the breakup of the EUSSR.

geno's picture

I agree. Screw the authoritarian EU. Unelected communists running that shipshow over there..

geno's picture

I agree. Screw the authoritarian EU. Unelected communists running that shipshow over there..

Déjà view's picture

UPDATED: 13:46 BST, 10 November 2011

All 20,000 British troops will be withdrawn from Germany by 2020, bringing to an end a continuous presence since 1945, it will be announced today.

"Waste 2 years"...BAOR or BFG believe 9 years is fine...FYI moving date was 2035

Al Gophilia's picture

Just "PULL IT"!!!. THAT'S how you make money. AKA,  building 7.

myne's picture

Just print all the GBP they ask for.

Every single GBP is a voucher to buy British goods.

Be generous. Triple it!

They can't be spent anywhere else.

They can be traded, which might lower the pound. Oh noe! They haven't been trying to do that for 8 years or anything!

Fuck it. Just print it and raise rates when inflation rises.

tie_boxer's picture

There we go, what a scam, win the election and tell the public that we can't leave the EU because it would cost the UK too much, way to go, slam dunk stitch up. All the Brexit voters will rise up and scream and then rush off and have nervous breakdowns because this new tory government will have such a majority that no other party can do anything about it and the elites will have what they always planned...... 

RattieNomNom's picture

yeah, robbing those stupid bastard migrants of the last pension they could have.

Ms No's picture

Welcome to the hotel California.  Everything you have is ours.  You have no say.

Love, the Redshields. 


mily's picture

now yous can't leave

gregga777's picture

The UK should just leave the EU and tell the EU technopussies that if they want a divorce payment they are free to try and come take it.  Since the UK has the largest and most battle hardened military in Western Europe that would be a sight to see.  The UK would wipe the floor with those EU technopussies.  

Joe A's picture

Yes, but the EU does not need a real war with the UK. The war of the EU with the UK will be an economic one: the closure of borders, shutting out the UK from the EU single market and imposing tariffs. It will be 65million Brits against 435 million EU citizens.

Of course in the meanwhile both the EU and Merkel are silently laughing. The EU because it will open an opportunity to punish the UK in order to discourage other EU countries to leave and Merkel because with Britain out of the way Germany will assume an even stronger position in the EU.

British hope is to further attract the world's businesses but for that they need to cut taxes to the businesses even further. Another hope could be that other EU countries were to leave the EU.

philipat's picture

You do not recognise that:

  1. The EU has a substantial positive trade surplus with the UK (which is referred to as "Treasure Island" by the car manufacturers) and is a particularly important market to German car manufacturers and French Wine and Food producers.
  2. The worst the EU can do is recognise WTO trade rules which impose small and quite manageable tariffs on trade where there is no "Free Trade Deal" in place. Further, most "Free Trade Deals" (TTIP, TPP etc) have nothing to do with Free Trade and everything to do with providing pwoers over Sovereign States for Global Corporations.
  3. The UK would be free (Finally) to negotiate Free Trade deals with ROW and not have to keep waiting because half of Belgium doesn't agree!
  4. In summary, the EU needs The UK more than The UK needs The EU.
fajensen's picture

Sometimes "Half of Everything" is a fair price for the ending of a shitty relationship.

I think that principle applies to the UK, especially after the the many postulates on how special the brits are and much the EU need the UK so we will be doing us a favour by subsuming ourself to their demands. As long as the UK get to keep their commonwealth inside the UK borders, its a huge win for the EU.  

Rip van Wrinkle's picture

You also recognise that the UK is the second biggest contributor to the EU? £350 million per week. We may get some back but only on the basis that the EU decides how it's spent and that the UK government would have to match funding.


If we leave, even under WTO rules, as the manufacturing trade is currently constsituted, the UK would be over £70 billion a year up on tariffs. That's the UK deficit solved.

Yog Soggoth's picture

Not only that, but the EU was doomed from the start. More will leave. Then it will just be E. I am sure somebody will run off with whatever profits this pyramid scam pilfered.

Ghordius's picture

"the EU needs The UK more than The UK needs The EU"

that's the strangest of all Brexiteer "Articles of Faith". putting that as "in summary" does not substantiate it

Déjà view's picture

U.K.raine-Euro P ons...

While the EU market is an important destination for the UK’s exports and an important source of UK imports, the UK is a smaller player in terms of significance to the EU.

This is partly because the EU is such a large market that any one destination for exports or source of imports will be relatively small compared to the total.

The EU accounts for almost half of the UK’s exports, reflecting the fact it is such a large market, comprised of 27 other countries.

"In summary"...we will find out who needs who...

EddieLomax's picture

You have fallen for the same old fallacy here, that bigger equals better, it doesn't.

If it did then India and China would be the most prosperous countries.  In fact out of all the large countries in the world only the US has good living standards for its citizens.

Strip that fallacy away and what we have left is that the UK will not be saddled bleeding billions out for the EU to spend, neither will it have to care for millions of low skilled workers with its welfare state, lastly we won't have to put high tariffs on goods from food to electronic components.  

Just removing the above burdens alone will be a positive for business.

Joe A's picture

You cannot compare India and China, where the majority of the people live in poverty, with the EU, even if you would take into consideration the poor countries of the EU in Eastern Europe where btw. the biggest growth potential is.

The EU countries are the biggest trading partners for the UK. The UK depends more on trade with the EU then vice versa. The UK, when singled out of the common market, would have to replace a large part of that trade. The UK would still need the low skilled workers that they want to kick out/prevent from entering.

This is a divorce, and it will be an ugly one because of political reasons.

fajensen's picture

Suuure. Problem with that plan is that the UK followed the US model with procuring millitary crap that doesn't work and will cost trillions in retrofits and upgrades to the joy of BEA & Co. but without having them trillions to pay for it!

So now the UK has missile-less missile ships, carriers that can't launch aricrafts and (probably) subs that wont sink and of course Trident, which will target something probably on the wrong hemisfhere though.   

The only "battle-hardened" in the UK are the soccer hooligans and the islamist nutbars, nurtured and protected by the UK.  

HowdyDoody's picture

The UK military is really tough. They train the Nazis in Ukraine, they trained the terrorists in Libya and they are training more terrorists in Iraq for use in Syria.

effendi's picture

Britain should just turn it around and demand a trillion in alimony from Europe

Déjà view's picture


England will do what Washington/Tel Aviv..."demands"...

Swamp Yankee's picture

Tell them to take  a long walk off of a short pier.


What are they going to do?  Kick them out?

Fake Trump's picture

UK should have signed a pre-nuptial agreement with EU. As it stands now, UK is having a huge problem ahead. Just walking off will trigger a massive trade war between UK and EU.

EddieLomax's picture

Not sure what ammo will be used in this war though?  French food and French cars at rock bottom prices?  They will be sold at a loss to keep up with non-EU goods.

And without the vast subsidies the EU lumbers governments with we could make and sell goods competitively with EU produced ones.

Ms No's picture

That's probably all true but if they keep surrounding Russia with missiles they likely wont have to worry about any of those things.


EddieLomax's picture

This presentation has two things wrong, first there are only two options, the hard brexit and the soft/ugly brexit.

In the soft/ugly the UK lumbers itself with vast liabilities, reneges on the voters desires to get fully out of the EU and keeps trade barriers with outside of EU parties.

The second thing wrong is that the hard brexit should not be assumed to be sudden.

We have 2 years to prepare for it so its plenty of time to setup tariff control points ready to start working in 2019.  That would also send a perfect clear message to the EU that if they want a hard brexit with WTO tariffs then they can have a hard brexit, at worst we just repurpose all those people to border security if we somehow negotiated a tariff free deal - personally I doubt it would be in our best interests with the demands Brussels will make.

shovelhead's picture

Two years?

By that time Britain will be negotiating under Sharia Law in EU.

Singelguy's picture

The best solution is for the UK to quietly negotiate trade agreemnts with other parts of the world. When all is negotiated, give the EU a take it or leave it offer and if the EU refuses, leave the next day, and sign the new trade agreements the day after. The EU will suffer much more as the UK has a £70 billion trade deficit with the EU. The german automakers will suffer the most.

EddieLomax's picture

Germany will definitely be hit, but I think they'll still sell plenty of cars because they're brands are luxury/high value = high margin.

But the French are screwed, all their cars are sold on tight margins that will be completely unable to compete if a 12% tariff is added.

I actually do think tariffs are a better way for us to trade here, the tax earned on tariffs can allow taxes elsewhere to be reduced, or at least for no new taxes to be added because we are currently running a deficit.

saudade's picture

What exactly are you going to sell? Marmite consumption is not that big in mainland Europe.

HowdyDoody's picture

The UK's main products are financial corruption and weapons. Those markets will still exist whatever the Brexit outcome.

Dien Bien Poo's picture

Youre a an idiot savant, without the savant bit. Thats really going to work....when the EU is the UK's biggest market. 

Debugas's picture

EU should simply close its market to UK ( by introducing 100% import tarrifs ) and let the London rot within itself

EddieLomax's picture

WTO tariffs, read and weep.

Jersey_Mountaineer's picture

And that wouldn't hurt EU businesses that rely on trade with the UK?

Ms No's picture

More proof that Bill Gates is nothing but an operative for the banks.  Not that anybody here needed more confirmation of that.

saudade's picture

The cards are on the EU side. The (((Alt-Right))) has been crushed

Jersey_Mountaineer's picture

And the Euro bankocracy wins again.

Ghordius's picture

which one? that part that is based in London? that part which consists in european branches of US megabanks?

Goldman Sachs, the Vampire Squid Firmly Attached To The Face Of Humanity which gave the eurozone so many scams? or that part that clears EUR derivatives?

Jersey_Mountaineer's picture

Then again, it's obvious that the EU pulled this number out of their ass, so there's no chance in hell that the UK will have to pay anything close to this. 

DeaconPews's picture

If I were the UK, I wouldn't pay it and leave. What will the EU do? Make me? lmao. 

They can't even keep their "refugees" from tearing the place up.