The European Commission is currently discussing the EU’s next multi-annual budget for the period 2021-2027 against a backdrop of Brexit and a future loss of €12 billion in the shape of the UK’s annual contribution. Nevertheless, according to the EU budget chief Günther Oettinger, there is unanimity among the EU27 to avoid making cuts to the successor to Horizon 2020 and the Erasmus student exchange programme. There is even talk of finding ways to increase the budget of the next framework programme for R&D.
It is clear that with the loss of the UK’s €12 billion per annum contribution to the EU budget, the Commission will have to compensate the shortfall with a mixture of cuts and additional contributions from EU members and from new sources. In terms of cuts, it looks likely that the Common Agricultural Policy and the EU’s Cohesion Fund, which between them eat up some 70% of the EU budget, will be streamlined.
In terms of new income, the Commission needs to find some €10 billion a year additional cash after Brexit to cover the cost of new tasks including controlling migration, defence research and new climate change programmes. In addition to possibly increasing the budget contribution of each of the remaining EU27 member states, new revenue could come from a tax on imported plastics, or by diverting the income from the EU’s emissions trading scheme from member states and channelling it directly to Brussels.
Earlier this month the Commission made a plea to the EU27 to increase their contributions from 1 per cent of total EU gross national income to a little over 1.1 per cent. Some countries, like France and Austria (2 net payers to the budget), have voiced opposition, saying that a smaller EU should be expected to do less. Other member states, such as Poland, are envisaging a higher contribution on condition that they do not lose out on the payments their countries receive from the EU budget.
In answer to the budget conundrum, Mr Oettinger did not rule out the possibility that the UK keeps up some form of contribution to the EU budget (similar to the arrangement with Norway and Switzerland) to that the country can also benefit from access to EU programmes.
The Commission is due to present its full proposal for the 2021-2027 Multiannual Financial Framework in May.