BRUSSELS chiefs are considering increasing the EU’s seven-year budget to £1.1TRILLION (€1.25trn) in a bid to plug the spending blackhole after Brexit as the bloc counts the cost of life without Britain.
Jean-Claude Juncker, the president of the European Commission, today unveiled his masterplan to prop-up the ailing bloc in the wake of the UK’s departure.
Bureaucrats have published the first draft Multiannual Financial Framework, which will run from 2021 to 2027 – the first directly affected by Brexit – and it is thought the loss of the UK’s contribution will have a major impact on the scope of the EU’s spending power from 2021.
As Brussels chiefs count the cost of life without the UK, EU nations will be ordered to fill the gaping £13bn Brexit sized hole by raising their contributions to around 1.1 per cent of gross national income of member states – a rise on the current 1 per cent commitments – which Mr Juncker described as “reasonable”.
Mr Juncker today told the EU parliament that the Brexit budget blackhole was €15billion (£13billion) – higher than the previous €12bilion (£11billion) stated by European budget commissioner Guenther Oettinger.
And in a desperate bid to stamp its authority, the EU has also unveied a stricter “financial management” which allows funds to be cut off to countries where judicial rule is threatened, a new rule likely to raise eyebrows among Poland and Hungary.
Speaking to Parliament, Mr Juncker said it would “beef up links between the budget and respect rule of law” allowing for the protection of the EU’s cash.
But MEPs were quick to criticise the €1.279 trillion budget plans.UK MEP, Patrick O’flynn accused Mr Juncker of “living in dream land” by “pretending” its second largest contributor isn’t leaving.
He said: “Instead of cutting back accordingly, the commission wishes to increase spending,” adding that the EU bosses had ordered the “al la carte” option for the budget.
But EU Parliament member, Guy Verhofstadt, backed the budget by saying it was a “break from the past” and also took a swipe at Hungary’s Viktor Orban as he expressed his support for the new restrictions on members who do not respect the EU’s rule of law.
He said: “If a government of a member state nation does not want to apply or respect European values, they don’t need European money. That’s the reality.
“European money should be used to lift up our national economies, lift up our citizens, not to be given or granted to the family of Mr Orban or finance one or another football stadium in a constituency.”
Mr Juncker described the budget as “ambitious and balanced budget” saying it would be fair for all.
He said: “This is a modern, more simplified and flexible budget.
“We want to present a proposal that is taken seriously, and a proposal that can be the basis for future negotiations.“This budget is innovative in its structure and its simplification of rules.”
Mr Oettinger said the EU was determined to compete with the likes of China and the US so an increase in the financing of research and development was needed.
He said “both sides of the coins” were needed as they looked to increase member nations contributions, saying “saving and the other is by calling on member states to pay in slightly more than they have before. If we save some money, and we expect more to paid in”
Mr Oettinger said cohesion would be cut by 7 per cent, agricultural spending by 5 per cent and direct payments cut by 4 per cent, while Erasmus spending will be doubled.
He added: “We think it’s a good compromise between ambition of Parliament and preparedness of member states to pay a little more.”
The Commission proposed an overhaul to the current overall financing, Own Resources system to diversify the budget’s sources of revenue including 20 per cent of the revenues from the Emissions Trading System, a 3 per cent call rate applied to the new Common Consolidated Corporate Tax Base, a national contribution calculated on the amount of non-recycled plastic packaging waste in each country.
This would make up around 12 per cent of the total budget and could contribute up to €22 billion per year to funding new priorities.
The EU budget is likely to reveal cracks in the 27-member bloc, who have put on a united front in Brexit talks.
While, the EU’s largest budget contributor, Germany, has said it stands ready to pump in more cash to the Brussels machine, the Netherlands, Denmark, Austria and Sweden have raised concerns over stumping up any more cash to prop up the bloc in the wake of the UK’s departure.
Dutch PM, Mark Rutte, said the MFF was “unacceptable”.
In a statement, he said: “As far as the Netherlands is concerned, this proposal is not an acceptable outcome.
“The Netherlands sees the Commission’s proposal as leaving the Netherlands paying too high a share of the bill. This also affects other countries. A smaller EU as a result of Brexit should also mean a smaller budget. That entails making clearer choices and spending less.
“Under the proposal, the costs of funding the budget are not shared fairly. Brexit is already set to hit the Netherlands’ economy hard. This MFF proposal imposes a disproportionately high bill on top of that.”
The smaller and richer members make up the group of 10 countries who contribute more in budget funds than they receive in EU subsidies.
Meanwhile, a source told the Financial Times it was “worrying” for central and Eastern European countries who have disproportionately benefited from budgets in the past.
But European Parliament President Antonio Tajani said he would have liked the budget contributons “not to be 1.1 per cent but 1.3 per cent”.
European budget commissioner Guenther Oettinger has previously revealed the EU faces an £11billion shortfall due to Brexit, which forms part of an overall £18billion budget blackhole caused by other crises including migration.
Some EU projects, including development and agriculture, will be cut, while the commission is planning to shift more money into the costs of handling the migration crisis, defence and the digital economy.
In a series of tweets this morning, Mr Oettinger said budget plans will “moderately reduce” the agricultural policy and cohesion, while there will be more money ploughed into research, Erasmus, defence and border protection.
He said the budget will increase due to the inflation and the added pressure of migration and border security.
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