UK may have to make payments into EU budget during Brexit transition period

Written by Martin Banks on 23 February 2018 in News
News

London could also lose its rebate if it extends the Brexit transition period beyond 2020.

Britain could have to make payments into the EU budget for the duration of it's Brexit transition period.

The warning, from Bill Cash, the chair of the UK House of Commons European Scrutiny committee, comes ahead of a key summit of EU leaders in Brussels on Friday.

Cash was speaking on Thursday in a select committee evidence session with the UK ambassador to the EU, Sir Tim Barrow, and Brexit minister Robin Walker.

Friday’s summit, which excludes the UK, will address how to deal with the budget hole created by Brexit.


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Ahead of the meeting, a senior EU official was quoted by the UK press saying Britain will lose its rebate if it extends the Brexit transition period beyond 2020, as it would be expected to contribute into the EU budget during that time.

Aside from the impact of Brexit on the next long term EU budget, an alliance of EU member states grouped together as the green growth group (including Germany, France and the UK) will ask that EU funding be “coherent with the EU mid and long-term climate and energy targets.”

The countries argue that the yearly investment gap to meet the bloc’s 2030 targets is almost €180bn in the period from 2021.

The Committee of Regions (CoR) agrees, saying that around 25 per cent of EU regional subsidies are spent on climate-related projects and that any cuts would impact climate action efforts. CoR president Karl-Heinz Lambertz is calling for the post 2020 EU budget to be increased FROM 1 to 1.3 per cent of GDP.

Lambertz said, “If Europe is to continue to be a global climate champion, if we are to make Europe green again, we must ensure local and regional leaders have the right funding. That means ensuring that EU cohesion policy – which currently commits more than 25 per cent of its budget to climate action – remains strong and effective.

“In recent debates we have set out new priorities, such as stemming illegal migration, improving European security and defence as well as investing more in the Erasmus programme. Additionally, we will have to face the issue of a gap in the EU budget due to Brexit” Donald Tusk

“Cohesion policy funds local climate and energy action plans, invests in energy efficiency, renewable energy and sustainable public transport in our regions and cities. Undermining cohesion policy would have grave repercussions on our ability to create green jobs, reduce our carbon emissions and move towards a low-carbon economy."

Members of the European Parliament’s budgets committee recently stated they want the EU to be “more ambitious in financing both existing and new priorities and want the EU budget to reflect a political project and long-term strategy for a stronger and more sustainable Europe.”

In a committee vote earlier this month, they called for post-2020 Multiannual Financial Framework (MFF) to be set at the level of 1.3 per cent of the EU’s gross national income (GNI) in order to be able to continue to support existing policy areas, like agriculture and cohesion policies, as well as provide sufficient funding to deal with new challenges such as security, defence or migration.

The committee backed two reports aimed at making the EU budget “more ecological and sustainable” including the use of new own resources.

MEPs warned that “no agreement can be concluded on the MFF without corresponding headway being made on own resources”, in other words, the revenue side of the budget.

Members also demanded the abolition of the rebate system and the introduction of new revenue for the EU budget, such as a tax on plastics and pollutants.

The committee’s position will be put to the vote in the European Parliament on 14 March.

“Brexit gives us the chance to radically rethink the EU’s multiannual budget (MFF). The cohesion policy should be directed towards long-term social support for economically weaker member states and regions, helping them to further develop high quality social security systems and stabilising the EU economy" Gabi Zimmer

Elsewhere, European council president Donald Tusk, in an eve-of-summit statement, noted that in October last year, the EU agreed to conduct a debate about its priorities.

“In recent debates we have set out new priorities, such as stemming illegal migration, improving European security and defence as well as investing more in the Erasmus programme. Additionally, we will have to face the issue of a gap in the EU budget due to Brexit,” he said.

He added, “This shows the seriousness of the challenges ahead. Beyond that, there is also the question of timing. There are many reasons to speed up our work on the next MFF, as compared with the previous negotiations. And this should be our aim but we also need to be realistic.”

Ahead of Friday’s get together, further comment on the post 2020 MFF revision came from Greens/EFA co leader Ska Keller.

The German deputy told this website, “If we want the European Union to be strong and active, we need to have resources for it. member states must fill the Brexit shaped hole in the EU budget. If Europe is to thrive, we need to invest in our people, our climate, and our future.

“We also need to put the EU budget on a more independent and sustainable footing, without being in the hands of squabbling member states. This can be achieved with own resources for the EU, for example through a carbon tax or a plastic tax as proposed by the budget commissioner.”

Further comment came from GUE/NGL leader Gabi Zimmer, who says. “Brexit gives us the chance to radically rethink the EU’s multiannual budget (MFF). The cohesion policy should be directed towards long-term social support for economically weaker member states and regions, helping them to further develop high quality social security systems and stabilising the EU economy.

“We can only achieve this with a much larger EU budget. We need massive public investment to repair the detrimental harm to the EU’s social standards and democracy caused by forced austerity.

“We must stop the practice of hedging private investments with public funds, and thereby giving away democratic control over general welfare while socialising losses and privatising gains.”

She added, “If we have a new Eurozone budget that links investment to ‘structural reforms’, then it would just be another insidious instrument to strangle workers’ rights and destroy the social fabric of our Union. Instead, the next EU budget should be used to tackle the poverty currently faced by 118 million of our fellow citizens.”

Following on from Friday’s summit, the European Parliament must establish its negotiating position on the EU budget post-2020. Two draft reports will be voted on in the March session in Strasbourg and these will provide Parliament’s input to the Commission’s legislative proposals which are due in May.

Adoption of a new MFF Regulation requires Parliament’s consent.

About the author

Marin Banks is senior journalist at the Parliament Magazine

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