BRUSSELS — The European Union may get a preview of the effect Brexit will have on its bottom line when EU governments tackle the bloc’s budget this week. And it risks being unsettling.
Battles over EU spending, which is funded mainly by national transfers, traditionally say more about the politics of Europe than about its economy. That’s because the European budget, while limited to 1 percent of EU gross domestic product, is increasingly viewed by member countries in an era of populist backlashes through the prism of net contributions and receipts.
Germany, Sweden, and Denmark warned in recent closed-door deliberations about the extra constraints that the United Kingdom’s planned departure from the EU will place on the European budget, highlighting the matter as a topic of concern, according to a national diplomat involved in the talks, who asked not to be identified because the discussions are private.
Ministerial meetings Tuesday and Wednesday in Brussels will tie together two EU budget issues that, in the run-up to Brexit negotiations, could reveal a degree of UK leverage over the bloc and future tensions among the other 27 member countries.
The United Kingdom has been a net contributor to the EU budget, averaging an annual payment of $8.3 billion over the past five years after a rebate negotiated by Margaret Thatcher in the 1980s.
EU expenditure is about $152 billion annually and is fixed in seven-year cycles known as the Multiannual Financial Framework, which national leaders set after a traditional summit clash over everything from farm subsidies to research aid. The current framework covers 2014 to 2020 and, following insistence by former British prime minister David Cameron, marks the first shrinking of the multiannual EU budget program.
Germany, the largest net contributor to the European budget, has flagged the challenges ahead by citing a “very common approach’’ with the United Kingdom, the No. 2 contributor.
“We want to have priorities within the EU budget, not just more and more money for the same stuff,’’ Germany’s deputy finance minister, Jens Spahn, said in a recent interview. “If the UK is on the leave now and is no more a contributor to the EU budget, it’s not just about who else is now jumping in, giving the money that is not there anymore.’’
The gathering Tuesday will involve deliberations by EU general-affairs ministers about a midterm review of the current financial framework. The European Commission, the bloc’s executive arm, has proposed $12 billion in spending adjustments in 2017-2020. The aim is to bolster initiatives aimed at countering the refugee crisis, fighting youth unemployment, and expanding infrastructure investment.
While the changes would occur within the existing ceiling of the financial framework, some EU capitals are signaling resistance as they gear up for Brexit talks that Prime Minister Enda Kenny of Ireland has said may be “quite vicious.’’ Denmark, another net contributor to the European budget, is among the opponents of the proposed shifts in the financial framework.
“In light of the considerable budget uncertainty associated with Brexit, the government finds it unsuitable to make such substantial changes to the EU fiscal framework at this point,’’ Finance Minister Claus Hjort Frederiksen of Denmark told members his country’s Parliament last week. He said the EU will be poorer after the United Kingdom’s departure and, as a result, the bloc will have less budget leeway.
On Wednesday, EU budget ministers will haggle over the draft of the 2017 spending plan, which faces its own set of adjustments including an extra $1.9 billion for migration.
Resistance is likely to come from the European Parliament, which wants to link a deal on next year’s spending plan with the review of the financial frmaework deal.
