Britain and the European Union are squabbling like a divorcing married couple over who picks up the tab for money they both agreed to spend while the UK remains in Europe.
The disagreement has spread into a tit-for-tat.
Britain wants to talk about a trade deal, but the EU refuses to budge until Westminster comes to a financial settlement.
So, what is the divorce bill and how much is it likely to be?
The bill is a financial statement of account as of March 2019 when Brexit is due to take Britain out of the EU.
Debits and credits
On the debit side – paid by the UK – are:
- Money pledged on EU infrastructure projects
- Promised budget contributions
- Money to cover the pensions of British civil servants who have worked in the EU
- Cash guarantees on loans between the EU and member states
- The cost of relocating EU agencies based in London
On the credit side – owed to the UK – are:
- Discounts on the UK contribution to the EU budget
- A share of the value of EU assets, such as buildings
- Money the EU has pledged towards projects in the UK
The issue is both sides disagree about the bill and are going through the accounts line-by-line to agree every expense.
Make or break discussions
Although Prime Minister Theresa May has promised to pay around £10 billion for two years to stay in the single market for a transitional period, she has made no public acknowledgment of paying anything else.
The worst scenario is both sides will fail to reach an agreement, so Britain will pay nothing and leave the EU on Brexit.
The likely result is no trade deal between the two.
The EU needs a trade deal with the UK as much as the UK needs one with Europe, so sooner or later, they will thrash out an agreement.
The question is how much will this cost is a pie-in-the-sky figure now.
Britain says as little as £5 billion when all the credits and debits are considered, while the EU has mentioned amounts between £40 billion and £200 billion.
The article first appeared on Money International here