ICAEW chart of the week – EU Budget 2018

With the Chancellor and Brexit Secretary both in Germany today to discuss future trade terms, this week also sees the start of one of the more complicated budgeting processes in the world: the European Union’s multi-year financial framework for 2021 to 2027.

This time there are two additional challenges to agreeing the budget.  The first is the finance team at the EU Commission is having to start the process without any idea what the eventual financial relationship between the EU and the UK after 2020 will turn out to be.  The second is the question of who either has to contribute more, or will receive less when the UK is no longer a major net contributor to the EU budget. 

The approximately €9bn net UK contribution each year represents around 7% of the overall EU budget. Financially this is probably not the largest challenge for the EU finance team – in theory it could be plugged by asking each member state to pay an extra amount equivalent to less than 0.2% of their domestic budgets. 

The politics are of course much harder than the arithmetic.  Will contributor countries, especially Germany, be willing to pay more? Or will eastern European countries such as Poland, Romania and Bulgaria be happy with receiving less?

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