EU Budget Woes or How Much Brexit Will End Up Costing Europe

There is no avoiding the elephant in the room when it comes to the post-Brexit debate around how the EU will fund its existence over the coming years. As proposals are discussed this week by the EU parliamentary budget committees to come up with recommendations for MEPs, will there be room for negotiation for EU member states?

Following UK's decision to leave the bloc, the 27 remaining EU members have got valid reasons to be quite concerned, especially as Britain's monetary contribution to the EU money pot was one of the largest. Significant changes will need to be proposed to the existing 2014 — 2020 budget plans, particularly for the remaining countries to require sharing the post-UK Brexit deficit. 

With countries such as France and Italy already facing a number of dips in their national economies and with Germany challenged by an economic squeeze — it is quite likely that the set-to-be tax increases to the general public in all EU states could cause resentment for having to pay the consequences of Brexit.

If we vote Leave today, there'll be an 8 billion Euro hole in the EU budget, not in our finances

— Baroness Peppa (@OffencePolice) June 23, 2016​

Other countries who already contribute large amounts to EU's budget will likely to see the fees increased, unless a fair negotiation takes place in accordance to national economies.

Budget Plan

In terms of the process that has already kick-started, the European Commission is required to propose a budget draft for the EU for the following year, or upcoming years even, particularly if the decision is made for amendments to the existing 2014 — 2020 budget plan.

This is then submitted to European Parliament and then changes are proposed by all state representatives to try to find an agreement on the final budget.

How should the EU be financed over the coming years? Read more about the procedure → https://t.co/G3LE4FqRvg pic.twitter.com/HDHuKowdSh

— European Parliament (@Europarl_EN) September 7, 2016​

Many of the EU state committees have already met to discuss their national proposals, while the remaining officials will meet in the coming weeks to prepare for the final convention in by October.

Member states collectively agreed back in July 2016 that next year's financial commitments should be budgeted at US$173.43 (€153.27) billion and any outgoing payments to EU states to be in the region of US$160.64 (€142.12) billion. This is considerably lower than what the European Commission has already proposed for its budget.

Wondering what the #EUbudget does?Here just some of the projects working for you https://t.co/NLpxtLJs2z pic.twitter.com/YhGBXr5jSt

— Kristalina Georgieva (@KGeorgievaEU) September 7, 2016​

A likely consequence of the UK's exit will bring a significant funding deficit to EU's overall budget which will encourage more pressures to the rest of the camp.

The option of cutting the budget spends will certainly be something the European Parliament will be forced to consider, but whether it does so to some likely detriment to itself is yet another unanswered question.