EU commission president Jean-Claude Juncker discards the idea that the UK will change its mind on Brexit and told the remaining 27 EU member states that they will need to pay more to fill the budget gap left by Britain’s pending exit from the EU.
At a meeting in Brussels with finance ministers to discuss the next period of EU spending, Juncker said that the remaining EU states needed to be ambitious and increase the amount they send to Brussels for EU programmes, rather than lower their contributions.
Explaining that he expected Britain to leave the EU on 30 March 2019, he said that “between now and then, we need to do our utmost to fund the means to react to the loss of a significant number of billions of euros.”
Mind the gap
At the end of a transition period likely to be between the end of March 2019 and 31 December 2020, the EU will be left with an annual structural spending gap of €12bn-€13bn. To compensate for the loss of Britain’s contribution, EU budget chiefs are proposing a mixture of spending cuts as well as increased contributions from remaining member states. Alongside the cuts, certain projects must be maintained or boosted, to avoid the risk of infighting amongst member states.
The commission is proposing that a 50:50 mix of “fresh money” and cuts can be used to cover Britain’s withdrawal from the EU’s seven-year financial framework. Juncker said he wanted EU member states to agree on a plan by May to spend more than their current 1% of GDP to maintain the vast majority of current programmes and meet future challenges, such as terrorism and climate change.
Always ready to reduce everything to a soundbite, Mr Juncker explained that the EU costs the European taxpayer the same as one cup of coffee a day “And I think Europe is [worth] more than one cup of coffee a day.” Given that a cup of coffee can cost anywhere between 75p in a local working man’s cafe and £5 in London, we think that’s a little vague.
Forced to accept Brexit as a fact, and with the chances of a second Brexit extremely slim, the EU’s finance ministers are becoming nervous at what the future holds in store.
Outlining his vision for the future of the bloc’s finances, European budget commissioner Günther Oettinger emphasised the importance of unity or “cohesion policy”. He said: “If you want to finance what we need for migration by making cuts on cohesion policy, you are going to split the European family. We have enough splits as it is. We need to be more intelligent. We can make reasonable cuts to cohesion policy, five to 10 per cent, but at the same time we need new money to deal with migration by funding our borders.”
He said that EU-wide schemes, including the £70bn Horizon programme aimed at funding research and innovation, and the £13bn Erasmus programme, allowing EU students to study at universities across the continent, should be exempt from the cuts because they are “about our future”.
“We need to get 27 governments on board … parliaments at a national level. They all have to agree,” he said. “Everybody has to be ready to strike a compromise. If you just have a rigid position of your own, we will not be capable of reaching agreement. Once the Brits have sadly left then I think it will be a sign of good governance to act and do this.”
Whilst publicly supporting the theory and talking about unity, many of the EU’s national governments are facing high levels of anti-EU sentiment and fear the effect of being asked to provide more money for Brussels to spend.
Sweden, Austria and the Netherlands have long been among the most Eurosceptic on the continent and cynicism towards Brussels has increased in recent years. In an EU-funded ‘Eurobarometer’ survey last year, citizens of the nations were scathing about paying anymore into the bloc’s budget. Fifty-eight percent of Austrians, 57% of Swedes and 55% of Dutch respondents said the EU’s political objectives “did not justify” any further increases in the Union’s budget.
Britain was a net contributor to the EU, providing a fair bit of cash, even after Margaret Thatcher’s famous rebate. With the reality of Brexit looming close, it’s no longer enough to posture in front of TV cameras. The EU now needs to start planning for a future without British cash.
Although the deficit caused by Brexit is around €11.5bn, when funding for new projects is taken into account, the extra funding needed to balance the budget may well be up to €20bn. Given that many EU states are net recipients of funding rather than contributors, the reality is that Brexit is going to be very expensive for the larger countries.
Not afraid of posturing and doubtless not having asked herself what Brexit is going to cost France, Nathalie Loiseau, France’s minister for European affairs, said the EU would benefit from the end of Britain’s rebate. “This expression ‘we want our money back’ is a expression we no longer want to hear,” she said.
Obvously, she means that the French people are going to be delighted to pay a couple of billion euros in extra taxes in order to see us out of the EU. Jolly decent of them, I’d say. Problem sorted.