How will brexit affect the EU’s budget?

As the Commission proposes its long-term budget, several EU countries are currently in the process of negotiating new spending limits. Germany in particular wants to limit spending, as it says that brexit will reduce the EU’s overall budget.

The German government says that it wants to limit spending to no more than 1% of the EU27 gross national income from 2021 until 2028.

This is much lower than the Commission’s current  budget. The Commission’s plans would require a budget of €1.135 billion, which is around 1.1%, and the European Parliament is advocating for around 1.3%.

The Commission says that a reduction in its funding could cause problems with budgeting and what it should spend on each area, including agriculture, research, and the proposed “European Green Deal”.

However, the Netherlands and Sweden also want a smaller budget, proposing similar figures to Germany. These countries currently benefit from a rebate, which they would lose after the EU loses funding from the UK.

Germany hasn’t publicly stated what level of spending it would support. But it’s pointed out that its financial responsibility will increase and contributions will rise post-brexit. It’s estimated its payments could go up by around €10 billion.

In a statement, the German government said: “We will conduct the MFF negotiations on the basis of 1% of the EU27 GNI. Losing the UK as one of the largest net contributors to the MFF means that even with this limit, contributions of the remaining Member States will increase significantly.”

“Cohesion funding for German regions needs to be balanced and in line with the general principle that changes should not be disproportionate, which is unfortunately not the case in the Commission’s current proposal.”

“The German net contribution will drastically deteriorate in the next MFF, mainly due to Brexit, changes in our GNI share, and the reduction in our cohesion envelope. This is only acceptable if fair burden sharing is guaranteed. For this, permanent corrections for excessive contributions are indispensable.”

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