Is there a ZOPA between the EU and the UK when it comes to a divorce settlement?
A ZOPA stands for Zone of Possible Agreement – also called a bargaining range.
In any negotiation we end up with two roles – a seller and a buyer.
The seller has a high price they want to get and the seller has a low price they would like to get.
The amount wanted by the EU has been talked about as being in the range of €100 billion.
Brexiteers in the UK, on the other hand, want to pay nothing.
A ZOPA exists if there is an overlap between the minimum a seller will take and the maximum a buyer will offer.
Refining the numbers, it appears that liabilities for the UK may be in the region of €80 billion but offsetting claims could reduce the total to €60 billion.
Europe may now want around €50 billion euros of £44 billion while the UK might be offering around £20 billion.
Both sides are tight-lipped about the actual amount.
If the buyer’s maximum price is less than the seller’s minimum – £20 billion vs £44 billion, for example, a negative ZOPA exists.
It may be possible to overcome that with other incentives – for example agreement on worker rights, acceptance of EU laws and so on – all of which come with political and legal complexities.
In the end, however, if the two parties don’t reach an amount acceptable to both, there will be no ZOPA and both will have to walk away.
The negotiations continue…