EU budget chaos as post-Brexit reality sinks in.

Britain's departure from the EU has left the bloc with a massive €75billion hole in its finances over the next seven years alone, and as it becomes apparent that the union was relying on Brexit not happening, the new reality has exposed bitter divisions between the remaining 27 EU members.

Of the 27, only 9 are net contributors to the budget, with 18 taking more than they put in: Poland is the biggest net recipient, followed by Greece, Romania, Hungary and Portugal.

Luxembourg and Belgium, two of the richest EU countries, are also on the list of EU budget net recipients.

To plug the gap, and to ensure that the EU's plans to tackle climate change, to build a joint defence structure, and to continue propping up the poorer members, and increase in member state contributions from 1% of GDP to 1.08%, or some €1.09 trillion is being called for.

Austria, the Netherlands, Denmark and Sweden, the so-called "frugal four", all net contributors, have all declared their unwillingness to accept this.

Controversial Hungarian Prime Minister Viktor Orban, whose country is a major beneficiary, told journalists that he wants an increase of "'at least 1.3% or close to that".

“We have to acknowledge that the differences are too big still to find agreement,” German Chancellor Angela Merkel told reporters after two days of talks in Brussels.

The last weeks and the last days, we have worked very hard in order to try to reach an agreement regarding the next European budget. Unfortunately, today we have observed that it was not possible to reach an agreement. We have observed that we need more time. We know that this European budget is a very difficult topic, it's a very difficult negotiation, especially after Brexit and the gap between €60 and €75 billion. We have worked very hard to try to reconcile the different concerns, the different interests, the different opinions on the table. But we need more time. It means that we will see in the future how it is possible to work on this topic in order to succeed, in order to get an agreement in the Council, to have unanimity in the Council.

European Council president Charles Michel

Budget negotiations in the EU are never easy, and generally require several such meetings as that which has taken place in Brussels this past week. However, the loss of the bloc's second largest contributor and most important military power has destabilised the situation significantly. German taxpayers particularly are unhappy about a situation in which the few will have to dig even deeper into their pockets to support the many, who they are beginning to perceive as becoming comfortably, and increasingly, dependent upon EU financial support.

The European Parliament is disappointed by the failure of the European Council to find an agreement on the next Multiannual Financial Framework and on Own Resources. If we want to be able to deliver on the expectations of our citizens, we need to back up our ambitions with sufficient funds. Europe is facing unprecedented challenges such as climate change, digitalisation and a new geopolitical order. We should also recall what the European construction, and especially the Single Market, have brought to our countries in terms of growth and development. Lowering our ambitions could only have a negative impact on years of progress and integration. No country acting alone can effectively tackle these challenges and maintain the existing acquis. It is therefore essential to quickly find an ambitious agreement on the EU long-term budget and on own resources. I hope that the forthcoming negotiations will go in a better direction than those we have been witnessing over the last hours.

European Parliament President David Sassoli

The EU also takes 75% of the customs duties, agricultural duties and sugar levies collected by each member state when goods enter the customs union, which may explain why the EU is attempting to use the so-called Northern Ireland backstop as a means to keeping the UK in the customs union.

Should the EU member states fail to reach agreement, and to cease making their contributions, it is conceivable that the institutions could grind to a halt and salaries could go unpaid. The EU has no reserves: it lives from month to month.

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Gary Cartwright

Gary Cartwright

Gary Cartwright is publishing editor of EU Today.

An experienced journalist and published author, he specialises in environment, energy, and defence.

He also has more than 10 years experience of working as a staff member in the EU institutions, working with political groups and MEPs in various policy areas.

Gary's latest book WANTED MAN: THE STORY OF MUKHTAR ABLYAZOV: A Manual for Criminals on How to Avoid Punishment in the EU is currently available from Amazon

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