Scenario 1: no extra funding for UK budget shortfall, harsh spending cuts
In this scenario, resistance among net contributors against higher contributions
(on top of the rebate reshuffling) would lead to harsh cuts of the EU budget
amounting to the UK’s net contribution (including customs duties and sugar
levies) of around EUR 10 to 11 bn.
Post-Brexit spending would have to be
reduced by around 8% to EUR 129 bn. However, the size of the budget relative
to EU27 GNI would still increase to slightly above 1% from below 1% in the
current framework, given the UK’s larger contribution to the bloc’s GNI than
budget. If it were decided to keep the GNI-ratio of the budget unchanged,
spending would have to be cut even further by almost 12% to EUR 123 bn.
In both cases, sizeable savings regarding existing programs and budget
headings would be necessary, despite the Commission’s opposite call for higher
spending e.g. On migration and security-related issues.
As pointed out in recent
paper prepared for the European parliament, a EUR 10 to 11 bn spending cut is
more than the entire annual budget spend for example on the Horizon 2020
program or equal to 20% of the total regional policy spending. 10
To what extent individual countries would be affected very much depends on the
allocation of cuts between different spending categories as well as between
wealthier and poorer member states. If net contributors remain unwilling to forgo
their receipts from the programs one could assume that budget cuts would be
equally applied to all budget headings and countries. In case of an 8% cut to the
budget, this would translate into an 8% cut to all spending categories and all