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EU leaders at odds over filling €75bn Brexit shortfall EU leaders at odds over filling €75bn Brexit shortfall
(about 7 hours later)
Agreement on a final budget deal at summit is unlikely, says Danish PMAgreement on a final budget deal at summit is unlikely, says Danish PM
A summit to fix the EU’s long-term budget looked in danger of ending in failure after less than a day of talks, with leaders miles apart on how to fill the €75bn (£63bn) hole left by Brexit. EU leaders were left holed up in the staff canteen in Brussels as they argued over plans to fill a €75bn Brexit hole in their budget after Angela Merkel led other major contributors in rejecting a proposal that they hand over billions more euros.
As sources predicted a potential early close in Brussels, the European council president, Charles Michel, came under criticism for aiming “far too high” with a proposed budget of 1.074% of the bloc’s gross national income (€1.094tn). A number of the prime ministers and presidents, including the French leader, Emmanuel Macron, a glass of red wine in hand, settled down for a buffet dinner at the EU’s Europa building as the budget summit dragged on.
One EU diplomat said on Friday morning: “He wanted enough cash to buy a Range Rover; we only have the money for a Volkswagen – and worst of all he asked Mutti [the German chancellor, Angela Merkel] to pay for the Range Rover.” The UK’s departure has left EU capitals struggling to find the cash for their plans over the next seven years to tackle the climate emergency, aid poorer regions and continue to subsidise farmers through the common agricultural policy.
EU officials insisted that the negotiations would continue, as leaders prepared to meet again at midday central European time. But the Danish prime minister, Mette Frederiksen, told reporters as she arrived that it appeared unlikely that EU leaders would reach a final budget deal at the summit. Four member states, known as the “Frugals” – the Netherlands, Denmark, Austria and Sweden – have insisted that the EU budget amounts to no more than 1% of the bloc’s gross national income.
“I’m prepared to stay the whole weekend, but no, I don’t think we are going to reach an agreement,” she said, adding that leaders would probably require another meeting in March. They received the support of Merkel, the German chancellor, in opposing proposals that would slash rebates they receive on their contributions.
The 27 heads of state and government had been expected to talk at least into Saturday, and possibly through the weekend, on the multi-financial framework, setting funding from 2021 to 2027 for the EU’s programmes from agriculture to space, defence and regional development. The budget negotiations, which started on Thursday evening, looked set to continue into Saturday after the initial spending plan put forward by the European council president, Charles Michel, failed to impress.
Sources said that such was the deadlock that it would be likely to end on Friday afternoon unless Michel delivered a significantly revised proposal. Michel, a former prime minister of Belgium, had come under fire for aiming “far too high” with a proposed budget of 1.074% of the bloc’s gross national income (€1.094tn).
The self-styled “frugals” – the Netherlands, Austria, Sweden and Denmark – are insisting on a budget of no more than 1% of the EU’s gross national income, and retention of their rebates. One EU diplomat said of Michel: “He wanted enough cash to buy a Range Rover; we only have the money for a Volkswagen – and worst of all he asked Mutti [Merkel] to pay for the Range Rover.”
On the first evening of the summit on Thursday, Merkel had joined the group of leaders by insisting Germany would also retain its full rebate for the seven-year period. The latest suggestion tabled by the European commission on Friday evening would reduce the size of the additional burden on the the biggest payers, including Germany, through significant cuts in the EU’s science and research programmes. The compromise proposal would trim €10bn off a budget put forward by Michel.
Arriving at the summit on Friday morning, Andrej Babiš said that unless those leaders changed their minds, “we can go straight home”. The Czech prime minister said: “They propose that all states pay €75bn less into the budget than is proposed.” Under the new plan, the four Frugal member states and Germany would retain their rebates.
Mark Rutte, the Dutch prime minister, has led the charge of the frugal states against the more expansive demands of the so-called “friends of cohesion” group, who are the largest recipients of funds for the development of the EU’s poorest countries. France would see increased cash for their farmers through the common agricultural policy. The hand-outs would be made up through reductions to the Horizon research programme and the space programme.
The Netherlands claims Michel’s proposal would increase its contributions by 20%. The commission proposal is for 1.069% of GNI. The Austrian chancellor, Sebastian Kurz, said the momentum was in the right direction but there are doubts whether the cuts are significant enough to win over support.
Emmanuel Macron had appealed to fellow leaders not to allow Brexit to derail the EU’s spending ambitions, as he aimed to secure extra cash for French farmers. The stance of the richest member states has enraged countries who are net recipients of EU funds known as the Friends of Cohesion, in reference to the main stream of cash dedicated to the EU’s poorest regions.
Andrej Babiš, the prime minister of the Czech Republic, said that unless the Frugals changed their minds, “we can go straight home”. He said: “They propose that all states pay €75bn less into the budget than is proposed.”
The Estonian prime minister, Jüri Ratas, said that “all countries need to step back one or two steps” in order to find a compromise.