Ireland’s contribution to EU budget will increase post Brexit by an extra €138million – Hayes
The more we grow as an economy, the more we will have to pay into the EU budget
Brian Hayes MEP today said that the State could face a bill of an extra €138 million to the EU budget to compensate for the UK’s budgetary contributions once Brexit negotiations are completed.
“Britain is a net contributor to the EU budget. As long as Britain is a member of the EU it pays in more than it gets out. While the negotiation on Brexit hasn’t started, at the end of the negotiation, Ireland’s contribution will increase. I believe that one calculation model is that Ireland may have to pay at least an extra €140 million to make up for the shortfall in the EU budget. This calculation is on current year’s prices. Assuming the economy continues to grow and the longer the negotiations take, the final figure could be much higher.
“The government needs to begin preparations for such a hike; there needs to be a strong emphasis on ensuring that public finances are in a sound position to deal with the EU budgetary impacts of Brexit.
“The UK’s contribution to the EU budget in 2015 was 13% of the total share of budgetary contributions – that’s a huge portion that could be stripped away in an instant following Brexit negotiations. Only France, Germany and Italy have contributions that rival the UK’s.
“Ireland became a net contributor to the EU budget for the first time in 2014. And given that our growth rate was 26% last year, we are set for further increases in our contribution for 2017. The more we grow as an economy, the more we will have to pay into the EU budget. But Brexit will now create an added complication to role in the EU budget.
“Frankly, I believe it is a good thing that Ireland is now a net contributor to the EU budget as we will now be able to set the rules on how the budget is devised. Our voice at the EU decision making table will be much more significant. With more contribution comes more clout. It is also a good thing that we can now share in the benefits that we’ve gained over the past 40 years of EU membership – in excess of €44billion in direct support.
“However, in the meantime, the issue of budgetary contributions will play an important role in Brexit negotiations. The question is whether net contributors should provide additional payments to compensate for the UK contributions or if the net recipients transfer should be cut. And it is very possible that the UK will continue to contribute financially to the EU budget if they manage to get a Norway-style EFTA relationship with the EU.
“There are 3 likely scenarios that the European Commission will pursue in order to reallocate the UK’s contribution:
1The first scenario would mean that the UK’s annual contribution could be distributed proportionally across Member States, either through increases in contributions or decreases in receipts. Between 2012 and 2015, the UK’s annual contribution averaged around €10.3 billion. Based on this figure, and according to calculations on Ireland’s proportional share of the budget, our contributions would increase by around €138 million annually.
2The UK’s contribution could also be reallocated according to the Member States’ share of the total EU-27 GDP. This would mean that each Member State would have to pay an additional 0.06% of GNI to compensate – net contributors would face an increase of 0.06% of GNI and net recipients would face a reduction in transfers of 0.06% of GDP.
3Another possible outcome would be that 50% of the UK’s contribution would be allocated to net contributors and the other 50% would be allocated to net recipients.
“It is highly likely that contributions will be distributed in a proportional way, leaving Ireland with a hefty bill. The post-Brexit budgetary process will be subject to much intense negotiations between the EU-27. Common Agricultural Policy payments are sure to be affected in some way.
“Whatever the outcome, it is more important than ever that we manage our public finances prudently and have a solid and broadly based taxation base to meet our expenditure needs and commitments.”