The UK's exit charge from the EU: insights from modes of accounting

Heald, D. and Wright, I. (2019) The UK's exit charge from the EU: insights from modes of accounting. Abacus, 55(3), pp. 557-581. (doi:10.1111/abac.12166)

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Abstract

Whatever the final charge on the UK for leaving the EU, the money itself is relatively marginal to the former's public finances. However, this charge is politically sensitive and financially aggravating during one of the longest periods of fiscal austerity in the UK's history. The ways in which leaving is conceptualized have implications for any continuing financial obligations that must be managed within the context of fiscal austerity and political uncertainty. Yet, leaving the EU is a unique transaction: it is not analogous, for example, to a divorce settlement, the leaving of a club, the termination of a commercial contract, the leaving of a treaty‐based international organization, or secession from a state. Analysing the formulation of the charge in terms of the four modes of government accounting—financial reporting, statistical accounting, budgeting, and fiscal sustainability projections—enhances its fiscal transparency. It evidences not only the weakness and inconsistency of the UK's negotiating position but also the dominance in EU thinking of the short‐term budgetary calculations of the 2014–20 Multiannual Financial Framework over its long‐term sustainability without a large net contributor. The final amount paid by the UK will depend on the resolution of competing perspectives as well as on liabilities and contingent liabilities associated with the increasingly complex EU financial architecture.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Wright, Mr Iain and Heald, Professor David
Authors: Heald, D., and Wright, I.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Abacus
Publisher:Wiley
ISSN:0001-3072
ISSN (Online):1467-6281
Published Online:26 August 2019
Copyright Holders:Copyright © 2019 The Authors
First Published:First published in Abacus 55(3): 557-581
Publisher Policy:Reproduced under a Creative Commons License

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Project CodeAward NoProject NamePrincipal InvestigatorFunder's NameFunder RefLead Dept
775841ESRC-IAA: Public Policy Aspects of Economic DemocracyRobert McMasterEconomic and Social Research Council (ESRC)ES/M500471/1BUS - MANAGEMENT