New Treasury estimate comes as European Central Bank increases interest rates for first time in 11 years
Increasing interest rates incould push up the UK’s Brexit divorce bill by £5bn, the government’s Treasury office has said.
Originally the government estimated the bill covering spending commitments would be between £35bn and £39bn. This included loans guaranteed by the European Investment Bank for infrastructure and other projects signed off during the UK’s membership. “The primary drivers are the latest discount rates and inflation assumptions, which are centrally set by the government for valuing long-term liabilities,” he added. “However, given this is a multi-decade liability, the variables used in this forecast will continue to fluctuate up and down.”A Treasury spokesperson added: “The unprecedented recent rise in inflation and changes in discount rates have increased our pensions liability, which is the biggest reason for the increased estimate.