How much will Brexit cost to the EU?

Friday 22 September 2017

While financial consequences will be important for the EU institutions’ budget, Brexit may have unexpected political benefits for the EU by creating a new momentum for the Continent’s political integration process.

Financial costs difficult to overcome

In 2014, London contributed 11.3 billion EUR to the European Union budget. The amount is well behind Germany and France’s contributions as since 1984 the country obtained a reduction on its “bill”. On top of that, the EU gives back 6 billion EUR to the UK per year in the form of subsidies mainly focused on agriculture and scientific research. Therefore, the real UK contribution to the EU per year was around 5 billion EUR[1].

The EU budget being highly dependent on the Member States’ contributions and quite limited given its extensive competences[2], Brexit will clearly impact the EU’s capacity to carry out political initiatives. “Even if the Member States agreed to compensate for the loss of the British share, the budget would still need to be redirected towards the new European decision-makers’ strategic priorities. This could harm, for instance, the structural policies which today mobilise a large part of the budget, in particular the Common Agricultural Policy[3].

Mixed political consequences

The Brexit costs for the EU will however not only be financial. In a context of legitimacy crisis of the EU institutions and with a rise of Eurosceptic parties across the Continent, losing one of the biggest Member States is not a positive signal for the remaining ones. The EU could also fear the loss of credibility when facing some important trade partners or neighbours such as China or Russia.

However, it seems that the chaotic start of the Brexit negotiations and the political turmoil in the UK since the referendum vote did not encourage citizens in other EU countries to follow the Brexit example, as some might have feared.

A survey carried out by Bertelmann Stiftung showed that 70% of EU citizens would choose to remain in the EU if a membership referendum was held in their country[4]. This suggests that the Brexit stimulated a sense of togetherness among the remaining Member States. The Dutch and French elections following Brexit dismissed the Eurosceptic options and even brought to power the most Europhile French President ever.

On the 1st of March 2017, the EU Commission published a roadmap for the future of Europe, proposing 5 different scenarios, none of them being “the end of the European Union”[5]. France, Germany, Italy and Spain have publicly supported the idea of a multi-speed Europe in which the members of the bloc would pursue greater integration but at each country’s own chosen pace[6]. Other States, like Eastern European ones, would rather keep a homogenous construction.

Wind in the sail

On the 14th of September 2017, EU Commission President Jean-Claude Juncker gave a much-awaited speech on the State of the European Union in front of the European Parliament. While the speech he gave last year was gloomy and focused on the extremist parties’ threats across Europe, this year’sone was optimistic: “Wind is back in Europe’s sail”, he said[7]. "Ten years since crisis struck, Europe's economy is finally bouncing back. And with it, our confidence. Our EU27 leaders, the Parliament and the Commission are putting the Europe back in our Union.

All the eyes are now turned toward the elections in Germany as, despite this favourable wind, the future of the EU will continue to rely on the political ambitions of its biggest Member States.



[1] « Brexit » : que pèse le Royaume-Uni dans le budget européen ? – Le Monde, 16/02/2016: http://www.lemonde.fr/les-decodeurs/article/2016/02/16/brexit-que-pese-le-royaume-uni-dans-le-budget-europeen_4866410_4355770.html#gbBpuORGCTAPqej6.99

[2] A classical comparison to illustrate this statement is the number of EU staff, which is comparable to the one of the City of Paris.

[3] The EU's budgetary future could be defined to the detriment of structural policies – AliénorEU, 18/07/2017: http://www.alienoreu.com/article/the-eu-s-budgetary-future-could-be-defined-to-the-detriment-of-structural-policies_a161/

[4] Brexit boosts EU survey results: https://www.bertelsmann-stiftung.de/en/topics/aktuelle-meldungen/2016/november/brexit-boosts-eu-survey-results/

[5] White paper on the Future of Europe : https://ec.europa.eu/commission/white-paper-future-europe/white-paper-future-europe-five-scenarios_en

[6] In Versailles, EU’s big 4 back multispeed Europe http://www.politico.eu/article/in-versailles-eus-big-4-back-multi-speed-europe-italy-france-germany-spain/

[7] President Juncker delivers State of the Union Address 2017 https://ec.europa.eu/commission/news/president-juncker-delivers-state-union-address-2017-2017-sep-13_en

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