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Boris Johnson certainly struck a nerve in Paris when he suggested that under his leadership the £39B divorce bill may be retained. President Macron said that if we were to not pay the bill it would be like a sovereign debt default and there would be ‘consequences’. This sinister, threatening tone conjures up images of being punished by international markets with a lowering of national credit rating and an increase in the cost of servicing debts with a devaluation of the pound. Boris is right, however, to suggest that withholding the £39B may give us some leverage in determining the rest of the deal with the EU. Their minds are likely to be concentrated by the money in ways that they wouldn’t be by less prosaic stimuli.
Boris is promising to be tough with the EU in a way that the more brittle Mrs May never was. It may be exactly what we need as the EU believes it has the upper hand since the negotiation of the withdrawal agreement. The EU was keen to settle the financial commitments as the first stage in negotiations and Mrs May went along with this wish. Boris says he was never sure this was the right thing to do and he would rather see how the rest of the deal panned out before making firm financial commitments.
Mr Macron may posture and threaten but the truth is we are still immersed in a negotiation. Even if the EU is right and there is no further negotiation on the withdrawal bill there is still the matter of our future relationship with the EU. Until that is sorted out nothing is set in stone. The EU would do well to recognise that as a new PM comes into office he or she could do with an early victory to allow them to say they have contributed to the process. There is no way that the withdrawal bill as is will make it through the House of Commons. This leaves the EU with a choice between no deal and looking again at the withdrawal bill. It is in the economic interests of both parties to come to a deal. If this means that there needs to be some movement on the part of the EU in regard to the backdrop then so be it.
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