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The European budget puzzle

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How can the European Union do more with less money? This is the budget headache that the 27 reunited at the summit must tackle from today in Brussels.

Those who thought that the lives of Europeans would be easier without British bad payers are at their expense. Because the departure of this net contributor leaves a big hole in the box. Will miss between 60 and 75 billion euros to cover basic spending in Europe for the next budget cycle between 2021 and 2028. For the moment no country is satisfied with the proposals on the table. The negotiation of this exercise will not escape the rule of the genre: it will still be a real battle of ragpickers, with on the one hand the richest who will do everything to spend as little as possible, and on the other, poorer to maneuver to preserve the maximum benefits.

This budget amounts to approximately 1 000 billion euros

The President of the Council, the Belgian Charles Michel in charge of harmonizing the positions of the 27 proposes exactly 1,094 billion, this represents 1.074% of the GDP of the 27. This is below what the Commission plans which wants to spend more on the climate , digital, migration and security. But this is already far too much for the new miser of Europe, the Netherlands, Denmark and Sweden associated with Austria. For them every hundredth after the decimal point counts, because it represents 10 billion euros. These so-called “frugal” countries are in favor of a maximum contribution of 1% of GDP. Germany, which will undoubtedly pay a quarter of the bill alone, will do everything, too, to limit the increase in spending while France is campaigning mainly for the elimination of discounts. These rebates, first demanded by the British, were then granted to the 4 small net contributors who are currently resisting.

Who will be the main losers in the next budget?

Cohesion funds and the Common Agricultural Policy, Europe’s largest expenditure item, are the big victims of the shortfall caused by Brexit; in the current project, the envelope dedicated to these two items drops by 80 billion euros. The countries of the periphery, south and east of Europe, the biggest beneficiaries of the cohesion funds allocated to develop the poorest regions are therefore the big losers from this budget. In a column published by the Financial times the Polish Prime Minister denounces the arithmetic vision of the countries of the north and stresses that the aid granted under cohesion actually benefits everyone. Supporting figures for the period 2007-2013, he says, the gains generated by the cohesion funds resulted in an increase in exports of 96 billion euros for Poland, Hungary, the Czech Republic and the Slovakia and through direct income for the 15 other Member States, including 23 billion euros for the 4 so-called frugal countries.

What are the ways out of the impasse?

There are plans for new taxes on the table. On plastic for example. We also talk about carbon tax. And then there will obviously be sleight of hand. Europe, which has the ambition to count more in the world, will cut back on spending on its external action. In this context, aid to sub-Saharan Africa would drop by 15%.

►In short

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