The divorce bill created following Brexit after the UK began leaving the EU could rise to £42.5bn, potentially adding billions to original payments agreed, the government says.

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UK Treasury minister Simon Clarke claimed that inflation means the bill could rise up to £7.5bn higher than initially estimated.

A statement from Clarke says that the increase is "primarily due to the most recent valuation of the UK's obligation under Article 142 for EU pensions".

"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 spokesperson for the Treasury commented: "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.

"The true cost of the settlement is confirmed when payments are made, based on the value at the time. The Treasury continues to monitor and verify these payments in line with the negotiated agreement."

The UK first struck a deal to pay the EU for outstanding spending commitments after leaving the EU during Brexit in January 2020.

The Liberal Democrats say that the "terrible deal" is costing UK taxpayers billions.

Originally, the government estimated that the bill would be between £35bn and £39bn, which covers spending commitments made during the UK's membership of the EU.

The Brexit divorce bill - which was agreed to by Prime Minister Boris Johnson's government - also covered pension contributions for EU staff, as well as some funding for three of its research programmes.

Meanwhile, the EU will pay back some money the UK which was committed to the European Investment Bank (which comes to just over £3bn) and the European Central Bank (which is about £50m), among other things.

Back in July 2021, Mr Johnsons government rejected an estimate number from the EU of a £40.8bn total bill.