Brexit talks have brought up a number of contentious issues for the UK and the EU, and one key issue which sparked heated exchanges was the demand that the UK pay a £39billion divorce bill.
This led to a standoff between Brussels and London, during which one of the EU’s most prominent leaders sent a stark warning to Prime Minister Boris Johnson In June 2019, French President Emmanuel Macron told Mr Johnson if the UK tried to withhold the huge payment, talks could be scuppered. He said the divorce payment could be treated like a sovereign debt default. Nations which do not repay money they have borrowed – those which default on their sovereign debt – are punished by international markets.
A debt default leads to devaluation of the currency, an increase in the price of servicing national debt, and a lower national credit score.
Mr Johnson had just promised to take the UK out of the EU without paying the £39billion.
Mr Johnson told the Sunday Times in June last year: “I think our friends and partners need to understand that the money is going to be retained until such time as we have greater clarity about the way forward.
“In getting a good deal, money is a great solvent and a great lubricant.”
But a source close to Mr Macron said an attempt to evade the bill would meet “consequences”.
They said: “Not honouring your payment obligations is a failure of international commitments equivalent to a sovereign debt default, whose consequences are well known.”
Then-European Parliament chief Brexit negotiator, Guy Verhofstadt, also responded in hostile fashion.
He tweeted: “This would not only hurt the UK’s credibility as an international partner but it is absolutely unacceptable and contradicts what almost every lawyer in the UK thinks about it.”
Another senior Brussels figure said any attempt by Mr Johnson to withhold payment would put the “credibility of the UK as a sovereign signature” into doubt, the Sunday Times reported.
In the interview, the Prime Minister added: “I always thought it was extraordinary that we should agree to write the entire cheque before having a final deal.”
A big portion of the bill Brussels has requested the UK pay covers its contributions to the EU budget during the transition period, which ends at the end of 2020.
Now the UK is out of the EU and further down the transition period, the bill may not be as large as the £39billion figure.
BBC Reality Check and the Office for Budget Responsibility (OBR) estimated when the Brexit date was 31 October 2019 that the bill had fallen to £32.8bn.
The OBR estimated in January that the bill stood at just under £30billion – most of this to be paid by 2022, with some relatively small payments still being made until the 2060s.