The European Commission has presented its draft budget for 2018, the last time for the EU landscape as we know it. As of 2019, Brexit will have to be taken into account in EU budgets because the UK will no longer be a net contributor.

GD/AD – 06/2017

UK as net contributor

German Commissioner Günther Oettinger has presented a draft EU budget for 2018. This is the last budget which does not have to deal with the issue of who has to shoulder the loss of the UK’s financial contribution to the European Union. The UK has been an important net contributor despite the UK rebate system that has been in place since 1985. As reported by Eurostat, London made a net contribution after rebates of 9.9 billion pounds (12.5 billion euros in today’s terms) to Brussels coffers in 2014. The UK was ranked as the second highest contributor after Germany, followed in third place by France.

0.7 percent of gross national income

Payments are based on economic performance and VAT revenue. As a rule of thumb, around 0.7 of gross national income (GNI) is paid. For many years, France has been behind the UK due to France’s persistently weak economic situation in terms of productivity. Furthermore, France’s strong reliance on agriculture has meant that it has been able to draw on agricultural subsidies far more than has ever been possible for the UK.

Hard Brexit with competition between countries?

According to the European Commission, the UK should still pay for the years when they are no longer a member of the EU. It is difficult to believe that such a ‘deal’ would find a majority in the British House of Commons. In budgetary terms, the signs are pointing to a hard Brexit with few common regulations and the start of open or hidden competition between countries.

Eastern Europe fears expulsion of workers

Observers believe that Brussels is under an illusion if they think that ‘the others’ are still speaking with one voice. National interests are too diverse. Eastern European countries are worried about the expulsion of workers who send their earnings back home, thus boosting the home economy. This includes regular workers and the not insignificant number of people working illegally in the UK. Spain would have to worry about whether the many well-off British retirees with property in Spain would be forced to leave the country. This would have consequences for the real estate market in some holiday regions.