BREXIT WILL AFFECT EU BUDGET NEXT YEAR – 21 OCTOBER

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BREXIT WILL AFFECT EU BUDGET NEXT YEAR - 21 OCTOBER
21 Oct 2016

BREXIT WILL AFFECT EU BUDGET NEXT YEAR – 21 OCTOBER

Brussels Daily

EU budget: “We have to deal with the problem caused by Brexit

 

The UK’s decision to leave the Union will already affect the EU’s budget for next year. “There has already been an unforeseeable situation and now we have to deal with this problem,” said Jens Geier, the MEP who will negotiate on behalf of the Parliament regarding the bulk of the EU’s budget for 2017. MEPs will vote on Parliament’s position in plenary on 26 October. We talked to the German S&D member about how Brexit is affecting the budget and the upcoming negotiations with the Council

 

The outcome of the Brexit referendum will already affect the EU’s budget for next year as the value of the British pound is dropping. What should be done about it?

The interesting question is, how will the governments in the Council cope with this situation? They now have to decide between three very unpleasant possibilities; one is to ask the British government for more money. I don’t think that this would get a positive reception. Secondly, they can ask other member states to contribute more so that we can balance this artificial deficit created by the depreciation of the pound. This probably won’t be welcomed by the member states. Third possibility is what I would prefer. There’s a lot of money coming into the budget for example from fines and normally we’re not allowed to use this money. It’s only collected and then given back to the member states at a later stage. We could use these fines in order to cover this money.

I was convinced that Brexit would only affect the budget once we knew exactly what Brexit was going to look like, but as you have seen, there has already been an unforeseeable situation and now we have to deal with this problem.

Another issue, of course, will be the rebate. If the Brits leave the EU, they will have to decide in which areas they want to cooperate. For example, if they want to cooperate on research, which would be a win-win situation for the EU and the UK,  they would have to give the EU money to finance the European research policies. If they want to cooperate, they would have to pay.

Of course we will not give them a rebate again. But all the rebates for other countries are calculated on the basis of the British rebate, meaning that if the British rebate is lower, then the other rebates are lower as well. That will be an interesting point for the negotiations [for the EU’s long-term budget] that come after 2020. How do we cope with that?

 

Regarding next year’s budget, you are proposing a budget of €161.8 billion, which is €4.13 billion more than the original Commission proposal and more than the €157.4 billion you proposed at the same time last year. Why is it necessary to increase next year’s budget?

Last year we had two crises in Europe: the migration and economic crises. The situation is no better than last year and we are trying to learn a lesson from Brexit. People want to see Europe deliver and we can’t do more all the time with less money. This means that we need to show that the Parliament is dedicated to doing more to tackle these issues.

 

The European Parliament’s position is to restore the original budgets for infrastructure (Connecting Europe Facility) and research that were trimmed by the member states. Why is this important for the Parliament?

The cuts are made to mobilise money for the European Fund for Strategic Investments (EFSI), but research is crucial for innovation and the Connecting Europe Facility is a tool that directly creates investment in infrastructure. We think that additional money for the EFSI should come from revising the EU’s long-term budget.

 

Once the European Parliament has adopted its position, it will negotiate with the Council. However, next year’s budget will not be the only issue to be discussed. How will the talks deal with the upcoming review of the EU’s long-term budget?

I mentioned earlier that money from the revised long-term budget could be used to help finance the EFSI. The same could be done for the Youth Employment Initiative [an initiative to support young people living in areas with high unemployment rates].

We see it is achieving results and the youth unemployment rate is going down in key EU states. Therefore we want an extra €1.5 billion committed to this initiative, taken from a revised long-term budget.

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