Pressure on to stump up more for EU budget post Brexit

German EU Commissioner for budget and human resources Gunther Oettinger
German EU Commissioner for budget and human resources Gunther Oettinger

Sarah Collins

IRELAND and richer EU member states are under increasing pressure from Brussels to cough up more cash for the bloc's budget.

The future of EU farm and regional funds will become clearer tomorrow when the EU Commission publishes a budget blueprint for the years 2020-2027.

The EU faces a €12-14bn a year post-Brexit shortfall, which budget hawks such as the Netherlands, Denmark, Sweden and Austria don't want to plug.

On top of that, the bloc needs an estimated €8-10bn a year to finance new priorities, including migration, defence, education and research.

The European Commission had originally hoped to plug the hole through an even split between cuts and new money, but is now relying more on governments to cough up the extra cash.

The EU hopes to increase the budget to between 1.13pc and 1.18pc of the EU's overall national income - from 1pc currently - which works out roughly at an increase of more than €100bn. The European Parliament has said it wants an increase of 1.3pc.

EU officials hope that by attaching stricter conditions to the money - compliance with budget deficit limits, adherence to the rule of law and participation in migrant relocation schemes - it will convince the budget hawks to fall into line.

"We need a deal at the end," said a senior EU source. "My expectation is that some net contributors are willing because they know Europe is important for them."

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The commission is selling the cuts as "structural changes" to the budget - an "evolution rather than revolution" - in order to soften the blow, particularly for farmers and poorer regions facing the bulk of the spending reductions.

"No doubt, if you have two big programmes - CAP and Cohesion - you can't avoid cuts here," said a senior EU official of the proposals. "You can't avoid it but you should not damage these programmes."

EU budget chief Gunther Oettinger has floated the idea of around 6pc in cuts to the EU's two major spending envelopes, which together make up more than 70pc of the budget.

That figure would mean around €3.5bn a year less for the CAP, almost twice Ireland's annual national allocation. But EU sources expect less of a hit to the CAP than the Cohesion budget. The next CAP budget could be "at or very close to current levels" said one EU source with knowledge of the talks.

The key is how that money is distributed, particularly the 70pc chunk of the CAP budget that is paid out in direct subsidies to farmers, with Oettinger keen on cutting payments to the biggest farms.

The single greatest reassurance the EU can provide rural Ireland is through a viable and maintained CAP budget, according to the ICMSA president, Pat McCormack.

"The Irish Government must insist that the current CAP budget is maintained and if that means that the remaining member states make good the deficit arising from the UK's withdrawal then that is what must happen," he said.

IFA president Joe Healy said all Irish political representatives should row in strongly behind the campaign for an increase in the CAP budget, which is crucial for the future of Irish farming.

"CAP's level of delivery for farmers has been declining as payments have been reduced under the various reforms and further eroded by inflation. Everybody else in society expects increases in line with inflation. It is entirely logical that farmers should be entitled to an increase too," he said.

Agriculture Commissioner Phil Hogan said last week the EU was weighing a minimum €60,000 cap on direct payments across the EU. Ireland currently has a voluntary cap of €150,000.

One EU source says the debate ahead "will show where the political power rests post-Brexit in the EU", with France a key player. "What [French president Emmanuel] Macron is willing to accept on the CAP will determine what happens," one EU source said.

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