Jörg Haas, Brexit will shake up the EU budget, and that’s a good thing

It is easy to imagine two coalitions emerge in the negotiations about budget reform. The largest net recipients can be expected to defend today’s budget, especially the programmes on cohesion and agriculture. Net contributors, especially those affected by the discontinuation of rebates, are likely to lobby for cuts or reforms. The two groups are not new, but Brexit drives them further apart.

There are no clear legal provisions for adjusting the EU budget to the departure of a member state. At the same time, unanimity is needed to change today’s financial framework and to decide on a new one for the time after 2020. Therefore, a political compromise is unavoidable.

A positive outcome of the budget negotiations should not be taken for granted. Faced with net beneficiaries’ desire to protect their receipts from cohesion and agricultural policy, and net contributors’ desire to minimise the additional cost, the EU could get a budget that features the worst of both worlds: an old-fashioned budget centred on subsidies and a financing scheme that is complicated by a maze of rebates and exceptions.

Fortunately, there is potential for a good package deal. Countries such as Germany and the Netherlands could agree to contribution increases, but in return, the budget would need to be restructured. More money should be spent on areas where the EU can clearly create added value, such as research, migration, and the management of the common borders. Brexit opens a window of opportunity for ambitious budget reform. It is up to the EU member states to use it wisely.

 Jacques Delors Instistute, Berlin

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