Tuesday

25th Sep 2018

EU budget will not be affected by UK referendum

  • Budget commissioner Georgieva said the UK referendum does not effect the EU budget yet. (Photo: European Parliament)

The European Commission proposed on Thursday (30 June) a 2017 draft budget of €134.9 billion in actual payments with a focus on tackling migration, security issues and unemployment.

'In these difficult times the EU budget is not a luxury but a necessity. It helps as a buffer against shocks," the commission's vice-president responsible for budgetary issues, Kristalina Georgieva, said, adding the overall increase in payments compared to last year is 0.9 percent of the EU gross national income.

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Georgieva also emphasised that the outcome of the UK referendum will not have a direct effect on the budget, as the UK remains an EU member until the end of exite negotiations.

"For the time being the UK is a member, until the moment they leave, they contribute to the budget," she told MEPs on Thursday.

But the Bulgarian commissioner added that assuming the UK will initiate the exit process, and the exit negotiations will take two years, the issue will come up later, during the review of the multi-annual budget and likely during the UK-EU talks as well.

Georgieva told MEPs that, as a net payer into the EU budget, the UK contributes €5 billion a year with per capita contributions per year amounting to €77. The French contribute €89, and Germans contribute €120 per year per capita.

The commissioner added that the UK is the eighth largest contributor so its exit would be an issue in the future for the EU budget.

The 2017 draft budget would have to go through the member states and the European Parliament, both of which could amend it. An agreement is expected by the end of the year.

The money specifically for economic growth will total €74.6 billion in commitments (funding that can be agreed in contracts in a given year) in 2017, compared to €69.8 billion in 2016.

Focus on migration

The EU's executive proposes €5.2 billion to reinforce external borders and to fight people smuggling. €1.8 billion is planned to top up security costs in the wake of terrorist attacks on Paris and Brussels.

According to the proposal, €111.7 million will go to support Europol, the EU police agency, €61.8 million will be allocated to prop up security of the EU institutions, and €25 million will go for defence research in 2017.

The draft budget also includes €3 billion to set up the European border guard, to help finance the reform of the EU's asylum system, and the EU's asylum agency EASO.

The proposal also includes €200 million to provide humanitarian assistance within the EU, something that has been done before for Greece, where tens of thousands of migrants have been stranded.

Turkey's money

The draft also proposes €2.2 billion for actions outside the EU to stem the flow of migrants.

It includes €750 million for Turkey under the migrant deal reached in March with Ankara, aimed at improving the living conditions of refugees there.

Answering to MEPs in the parliament on Thursday, Georgieva acknowledged that member states have been dragging their feet in putting up the money for the Turkey fund, which amounts to €3 billion for a two-year period, with €1 billion coming from the EU coffers.

"The good news is that member states have deposited assurances for their contributions," she said, adding that the model of written guarantees from EU countries would be a good solution to ensure such funds are viable.

The budget commissioner told lawmakers that €150 million have been delivered and used to provide digital IDs for refugees, which also work as "credit cards" to buy food, pay for rent, and gain access to education.

Cohesion adjustment

The commission proposes to adjust the so-called "cohesion envelopes", subsidies for poorer areas for the period 2017-20, to better respond to member states' needs in coping with economic difficulties and the migration crisis.

The overall increase is €4.6 billion for 2017-20.

The recalculation means extra funds for Italy, Spain and Greece (€1.4 billion, €1.8 billion, and €836 million respectively), with other member states, like Belgium, Denmark, Ireland, Cyprus, the Netherlands, Slovenia, Finland and the UK also getting a top-up.

Five countries – the Czech Republic, Estonia, Sweden, Slovenia and Croatia – will see their money slightly reduced (all under €100 million) due to better socio-economic performance than expected.

The allocations for the UK would go up to €50 million between 2017-20, so Britain will receive more money in the final years of its EU membership.

Unpaid bills main hurdle in EU budget talks

Britain and the Netherlands no longer have a problem with paying their EU top-ups, but EU budget talks are stuck on how to settle a €28bn lag of unpaid bills.

Does Italy need €14bn of EU budget waivers?

The EU Commission has agreed to relax Italy’s deficit targets. That could help Renzi ahead of this week's local elections and in a later referendum on constitutional reforms.

Brexit is 'not the end of the world' for EU

The Slovak presidency and the EU Commission awaits Britain's exit notification but have their eyes on a future summit that will focus on reforming the Union.

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