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Brexit cost rises as Britain retreats on divorce demands

David Davis, Britain's secretary of state for exiting the European Union, arrived for talks at 10 Downing Street in central London on Wednesday.
David Davis, Britain's secretary of state for exiting the European Union, arrived for talks at 10 Downing Street in central London on Wednesday.DANIEL LEAL-OLIVAS/AFP/Getty Images

LONDON — The proposition that Britain could have its cake and eat it if it left the European Union, as the foreign secretary, Boris Johnson, once said, was always dismissed as a fiction by opponents. On Wednesday, it was quietly interred by the government as it capitulated on the amount it will have to pay for a divorce settlement.

And this was not Britain’s first capitulation over its EU departure, nor — almost certainly — will it be the last, analysts said.

What Johnson was saying was that Britain could secure the economic benefits of membership in the EU without paying a penalty or being subject to its rules, particularly on the free movement of labor within the bloc.


On Wednesday, Britain reportedly agreed in principle to a divorce check of around $47 billion to $53 billion in the hope of securing the start of talks on a future trade arrangement with the 27 nations.

The unofficial offer, which covers commitments made while a member of the club, roughly doubles Britain’s initial $24 billion pledge, made in September, which fell flat with the EU leadership.

For months, supporters of the withdrawal, known as Brexit, have rejected the idea of paying a substantial exit bill to honor commitments. Some, like the euroskeptic lawmaker John Redwood, have insisted that Britain owed nothing at all.

Yet, with time running out for Britain before it departs in March 2019, such pledges have collided, brutally, with reality.

Earlier this year, Britain’s chief Brexit negotiator, David Davis, told Parliament he could achieve a trade deal with the EU that provided the “exact same benefits” as its current membership in the bloc’s single market and customs union. He has not repeated that promise recently, probably because European leaders have said repeatedly that Britain cannot possibly enjoy the benefits of membership if it is outside the bloc.


In the meantime, other reversals are quietly underway. Lawmakers were initially told that EU law would cease to apply to Britain in March 2019, when it leaves. Now, the government has accepted that during the sort of “standstill” transition that Britain badly wants, European rules — including new ones — will apply to Britain, as will judgments of the European Court of Justice.

During this standstill transition — which Prime Minister Theresa May suggests could be two years — Britain will also have to accept the free movement of European citizens and will not be able to control migration from the Continent — even though immigration was perhaps the argument that proved decisive in the referendum.

Britain’s new pragmatism stands in contrast to some early remarks by May, who insisted that no deal with the EU was better than a bad one, implying that she was ready to walk away from the table.

But the reality, analysts and business leaders have been saying with increasing emphasis, is that May desperately needs to show progress on a reasonable departure plan, not a “cliff edge” exit that would potentially throw the economy into chaos. Business leaders have warned repeatedly that they will be forced to begin shifting operations out of Britain in the new year if nothing further is accomplished.