Scenario 2: full compensation of UK budget shortfall
Scenario 2: full compensation of UK budget shortfall, no spending cuts
In a second scenario, member states can be convinced that EUR 10-11 bn
additional spending needs to be provided in order to compensate for the budget
gap left by Brexit, an increase of around 10% compared to their current
contributions. If one assumes that no additional EU own resources can be
activated, this spending would entirely come from the EU’s GNI based own
resources as the budget’s residual resource.
The total budget would still
decrease – but only by the UK’s current budget receipts of EUR 7.5 bn to EUR
139 bn. Thus former EU27 expenditures as well as the EU’s joint expenses
could be maintained. However, this would require to accept that in terms of GNI,
the budget would increase to around 1.1% from currently below 1%.
As in the previous scenario, one might find it prudent not to open the Pandora’s
box of reallocating budget receipts between countries. For example, in order to
account for the new spending needs identified by Commissioner Oettinger, one
might decide to shift funds between and within budget headings while keeping
the impact on members’ total receipts neutral. In reality this might be rather
difficult. Countries with higher GNI-based contributions and/or which already see
their spending share increased due to abolishment of their rebates might call for
limiting the impact rather on net contributions than gross receipts. In this
scenario, the net contributions for Germany, France and Italy would go up by
EUR 2.7 bn, EUR 1.9 bn and EUR 1.5 bn, respectively (excluding the post-
Brexit impact of rebate(s) abolishment).
Compared to the previous scenario,
large net recipients among the new member states, in particular Poland (EUR
0.4 bn), would see a much smaller decline in their net receipts. This is because
their net position is less sensitive to GNI-based increases of payments than cuts
in expenditures.
EU Forecast
euf:ba18h:179/nws-01