As part of its withdrawal agreement with the European Union (EU), the UK has agreed to make a series of payments to the EU known as the financial settlement (often referred to as the divorce bill).
A big part of the bill is the UK’s contributions to the EU budget during the transition period.
The transition period is the time between the UK leaving the EU on 31 January and the end of 2020, during which the UK’s relationship with the EU stays largely the same, allowing both sides to try to sort out their future relationship.
It was feared that if the government had not agreed to make such payments it would have soured relations with the EU, making it harder for both sides to negotiate a future trade deal.
How much does the UK owe?
When the payments were first proposed as part of Theresa May’s agreement, details were given of how it would be calculated rather than a precise figure.
At the time, the settlement was estimated to be about £39bn, but that was based on a Brexit date of 29 March 2019.
When Brexit was delayed – repeatedly – it meant that some of that money was paid as the UK’s normal budget contributions, so less of it was part of the divorce bill.
So when the Brexit date was 31 October 2019, the Office for Budget Responsibility (OBR) estimated that the bill had fallen to £32.8bn.
It has not given a fresh estimate based on the 31 January 2020 Brexit date, but Reality Check sought some guidance from the OBR on how to calculate it.
The first thing to do is to subtract from the bill the EU budget fees the UK continued to pay in November and December of 2019. The OBR estimated this would be £1.62bn.
That leaves January 2020 to factor in. The OBR said the total for 2020 would be £10.69bn. To work out January’s figure, you would expect to divide it by 12.
Actually, it’s more like 14% because the EU usually requests a higher proportion of the contributions earlier in the year. That gives a total for the divorce bill of just under £30bn.
The OBR expects most of this to be paid by 2022, with some relatively small payments still being made until the 2060s.
This was the payment schedule expected for a 31-October-2019 Brexit date.
UK payments to the EU
In billion euros
What is the money for?
In addition to the contributions to the 2020 EU budget, the UK will also contribute to financial commitments that the EU made while it was a member, but which have not yet been paid.
The UK will also contribute towards EU staff pensions incurred before Brexit.
The UK will receive some money back – the £3bn of capital it paid into the European Investment Bank, as well as a small amount of capital paid into the European Central Bank.