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UK liable for 'divorce bill' even with no Brexit trade deal – NAO chief

British and EU flags
Britain’s Brexit divorce bill has been estimated at between £35bn and £39bn. Photograph: Virginia Mayo/AP

The UK will have to pay its Brexit “divorce bill” of up to £39bn even if no agreement is reached on a future trade deal with the EU, the head of Whitehall’s spending watchdog has said.

The head of the National Audit Office (NAO), Sir Amyas Morse, said on Tuesday that if parliament approves the withdrawal agreement in a vote in the autumn, it will become a legally binding treaty regardless of the success of separate trade talks.

His remarks are a blow for Theresa May, who has said she will not pay Brussels the money if it denies Britain a post-Brexit trade deal. The prime minister told the Commons in December that the cash offer was made “in the context of us agreeing the partnership for the future”. “If we don’t agree that partnership, then this offer is off the table,” she said.

The Brexit secretary, David Davis, has made similar assertions.

The chair of the Treasury committee, Nicky Morgan, asked Morse if he believed the payment was conditional on a trade deal. “No, that’s not my understanding,” he replied.

“As I understand this, the treaty, once approved, will pass into law in time for us to leave the EU, and then will become legally binding. Therefore the payments would fall to be paid no matter what, under international law,” he said.

“The payments are primarily in respect of continuing membership for the extension period. They don’t relate directly to whatever the future relationship may be.”

The apparent contradiction is explained by the fact that the UK is expected to sign two Brexit deals with the EU: a withdrawal agreement and then, after Brexit, a future trade agreement.

The withdrawal agreement will include a “political declaration” giving the outline of a future trade deal, which is why the government says it will have a trade agreement in the bag by the time it commits to paying the divorce bill.

It is possible, however, that trade talks could break down after Brexit, with the political declaration never morphing into a fully fledged trade treaty. In those circumstances, as Morse told MPs, the UK would still be obliged to pay the EU.

The size of the UK’s bill was not directly linked to the negotiations on its future relationship with the EU, he said.

The payment, estimated at between £35bn and £39bn, covers UK liabilities for ongoing EU projects up to the end of the bloc’s multi-year budget in 2020, and items such as pensions for EU staff, which could continue to be paid as late as 2064. The NAO said in a report last week that even relatively small changes could push the total beyond the £39 billion mark.