EU's BUDGET CRISIS: Bloc states told they face major cuts as true cost of Brexit hits

Posted on Feb 2 2018 - 11:17am by admin

The European Investment Bank (EIB), the institution for funding new EU projects, and the EU Court of Auditors said thanks to Brexit the bloc is going on a budget diet.

Speaking at an EIB conference in Brussels, president of the European Court of Auditors (ECA) Klaus-Heiner Lehne said while individual countries may end up paying more as a percentage of GDP into the next EU budget (which runs 2021 to 2027), there is little chance the budget will rise overall in absolute terms.

Mr Lehne said he believes the EU will not “slaughter holy cows” like direct payments to farmers and its €70billion (£62billion) of subsidiaries to poorer regions, but they will be “set on a diet”.

He added: “Our reputation in the UK is obviously better than the other court (European Court of Justice).”

But he reminded the audience that the ECA will have to audit any final Brexit deal between the EU and the UK.

Mr Lehne said: “Even after the transition period, probably for two or three years there will be projects to be executed and we will be in charge of auditing them.” 

He added Brexit will create work over many years for the ECA but he remains optimistic.

The UK’s contribution to the EU in 2016 was £14billion out of a budget of £126billion. 

In 2007, the five wealthiest EU countries – Germany, France, Italy, the UK, and Spain – contributed nearly half of the total budget and so when the UK leaves the bloc there will be a significant dent.

Former Prime Minister of Finland and now EIB Vice-President, Alexander Stubb, said the EU will not be able to rely on the EIB “being the last one standing at the bar” to pay for the huge gap in the EU budget left by Brexit.

Mr Stubb said while the next EU budget is “not going to be radically different”, the EU Budget Commissioner Günther Oettinger will have to be “the master of diplomacy”.

Mr Oettinger is known for his gaffes – such as describing Chinese officials as “slant eyes” – and Mr Stubb said he cannot “be the elephant in the glass china shop”.

Mr Stubb added: “We did a very good agreement with the United Kingdom.

“The UK did not want to cause trouble with the EIB, and the EIB certainly did not want to destroy its business model because of Brexit.”

The EIB Brexit deal struck in 2017 will see an initial €3.5billion (£2.20billion) paid back to the UK over 12 years.

Mr Stubb called for “rational and calm” Brexit negotiations and praised the UK negotiators.

He concluded: “The people on the other side of the negotiating table were very good. 

“Let me mention one guy, Alex Ellis, who used to be the financial counsellor here in Brussels on the UK side, so he understands the business of money and the EU budget, so it was kind of easy to get a settlement.”

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