UK pays EU £2.3bn after losing trade dispute

The UK has paid £2.3bn to the EU after losing a long-running trade dispute, with the amount including £1bn in interest.

The government announced the figure in a Written Ministerial Statement before recess next week.

The payments relate to a disagreement over the importation of Chinese textiles and footwear between 2011 and 2017 – when the UK was still part of the European Union.

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It was claimed the UK had failed to prevent the undervaluing of these goods, letting criminals evade customs duties by making false claims about the clothes and shoes.

In March last year, the Court of Justice of the EU (CJEU) found against the UK “on most liability points”, according to John Glen, the chief secretary to the Treasury.

It found that more than half of all textiles and footwear imported into the UK from China were below “the lowest acceptable prices”.

The European Commission has been seeking £1.7bn in compensation from the UK to the EU budget.

In June last year, the government made an initial payment of €678,372,885.63 – which it says was the “minimum, indisputable amount the UK considered due at that time in light of the CJEU judgment”.

Last month, the government forked out another €700,351,738.31 – the rest of the headline amount owed, minus the share the UK was due back having been a member state.

But Mr Glen went on to say that a final payment of more than a billion was made this week – of €1,227,884,519.53.

This was the interest due on the amounts already paid so in total, the bill was €2,606,609,143.47 – equivalent to more than £2.3bn.

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Mr Glen said: “These are substantial sums but represent the final payments and draw a line under this long-running case, with the UK fulfilling its international obligations.”

The UK left the EU customs union in 2021.

Downing Street says payment ‘right thing to do’

Asked if the bill was a good use of taxpayer money, a Downing Street spokesperson said: “It is a legacy issue from our time as part of the EU.

“The payment brings a long-running case to an end and protects UK taxpayers from the risk of further legal proceedings and a potentially bigger bill – so it was the right thing to do.

“Now we are out of the EU and can make our own laws.”

Mr Glenn said that taking into account the financial settlement, “the government has determined how an additional £14.6bn of spending by 2024-25 can be allocated to its domestic priorities, rather than be sent in contributions to the EU.”

“This additional spending was already included in the overall spending plans that the government set out at previous spending reviews.”