Farmers face 5pc cuts as EU announces new budget proposals

Farmers face a 5pc cut to farm subsidies. Photo: Stock image
Farmers face a 5pc cut to farm subsidies. Photo: Stock image

Jan Strupczewski & Alastair Macdonald

The European Commission met on Wednesday to agree proposals for a bigger new multi-year budget that will trigger battles among member states over how to fill the funding gap left by Britain’s exit next year.

Direct payments to farmers, which account for around a third of the entire budget, would be cut by about 5pc overall, with the biggest farms having subsidies capped.

A draft 2021-27 budget plan seen by Reuters confirmed plans to trim the biggest single item, farm subsidies, while boosting spending on research and digital technology, euro zone stability, compensating for job losses caused by open trade and, notably, on joint defence and frontier guards.

It also introduces a new mechanism to penalise countries — notably in the ex-communist east — where governments breach EU rules on ensuring judicial freedom and the rule of law. These could find some of their important EU funding being withheld.

“A budget for a Europe that protects, empowers and defends,” declared the Commission in its draft plan, urging the remaining 27 member states to make up the shortfall of at least 10 billion euros a year to be caused by Brexit after 2020.

That language reflects a campaign from Brussels to persuade voters the bloc remains relevant after a decade of crisis that has seen ferocious austerity in countries hit by the euro zone debt crisis and uproar over the arrival of more than a million irregular migrants across the Mediterranean in 2015 alone.

“A Europe that protects,” has also become a familiar demand from French President Emmanuel Macron, as he tries to work with German Chancellor Angela Merkel to tighten integration after the ever-sceptical British have left, while easing fears among voters that the EU means open borders and jobs exported abroad.

Budget Commissioner Guenther Oettinger, who will present the proposals after the morning meeting chaired by President Jean-Claude Juncker, told German television that the proposed budget would be greater in real terms than the 1.1 trillion euros in the 2014-20 Multiannual Financial Framework due to inflation.

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It will also be greater than 1.1pc of the bloc’s economic output — sharply up from the current 1.03pc.

Oettinger, who has called for states to show unprecedented speed and agree the budget within a year or so, said it was inevitable that there will be disputes: “There will be cuts, which many countries will complain about, and there will be new spending, which the others will complain about,” he said.

Some of the richest contributors, including the Dutch and Swedes, have insisted they will pay no more to fill the Brexit gap, while poor, eastern states like Poland demand no cuts.

Germany and France, the biggest paymasters, have said they are willing to pay more as long as they like the budget’s aims.

Farmer Cuts

Oettinger said direct payments to farmers, which account for around a third of the entire budget, would be cut by about 5pc overall, with the biggest farms having subsidies capped.

That could hit opposition from farm lobbies, notably in France, while the proposal to withhold cash from countries which fail to meet “EU values” in terms of independent courts will anger Poland and Hungary especially as their leaders are already at odds with Brussels over the “rule of law” issue.

“The rule of law is an essential precondition for sound financial management and effective EU funding,” the draft budget proposal says, noting that independent courts were needed to ensure fair tender procedures, combat fraud and so on.

Other highlights include ramping up spending on the new EU border guard force, intended to block illegal immigrants, and a 30 percent increase in foreign aid to 123 billion euros over the seven years, reflecting an ambition to project European influence as the United States appears to pull back.

The draft also foresees Brussels raising more cash for itself rather than relying on national contributions but its proposals for new taxes on plastics or big global tech firms or a claim on funds raised by carbon trading face stiff opposition.


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