• Reuters

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If Britain leaves the European Union without sealing an exit deal, it will not be legally obliged to contribute to the bloc’s budget, a committee of members of Britain’s upper house of parliament said on Saturday.

Money is likely to be one of the most contentious elements of the upcoming divorce talks. Other nations want Britain to pay its share of budget commitments — estimated informally by EU officials at roughly €60 billion ($63 billion).

Prime Minister Theresa May has said only that the government would consider paying into the EU to participate in “some specific European programs.”

Under Article 50 of the EU’s Lisbon Treaty, Britain has two years to agree on a deal with the EU, after which time it will leave without one unless all member states agree to extend negotiations.

“If agreement is not reached, all EU law — including provisions concerning ongoing financial contributions and machinery for adjudication — will cease to apply and the UK would be subject to no enforceable obligation to make any financial contribution at all,” the House of Lords’ EU Financial Affairs committee said in a report.

The report also concludes that Britain would not be in a position to claim a share of the EU’s assets unless they are included in a withdrawal agreement.

Negotiating what Britain owes is one of the EU’s priorities for this year, with EU officials saying the bloc wants to create with Britain a formula for calculating the amount rather than defining a concrete sum in advance.

Britain will have to weigh the financial and political costs of making payments to the EU in return for agreement on things such as EU market access, the committee said.

“If the government wishes to include future market access on favourable terms as part of the discussions on the withdrawal agreement, it is likely to prove impossible to do so without also reaching agreement on the issue of the budget,” it said.

“The political and economic consequences of the UK leaving the EU without responding to claims under the EU budget are likely to be profound.”

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