Brexit EU NIGHTMARE: Expert says bloc faces budget disaster | World | News |

Britain is currently one of the biggest contributors to the European Budget, but that will end once Brexit is concluded.

The hole left by the UK’s contribution is a cause for concern for European leaders as they consider the option of re-allocating funds from a smaller pot or asking member states to increase their contributions.

Speaking at the World Economic Forum in Davos, Mr Katainen said: “It is certainly a problem and we have to address it.

"If I should bet something, we need to adjust the budget to a certain extent but also we need fresh money from member states. 


UK's decision to leave the EU will be a 'problem' for member states due to the budget shortfall

Related articles


EC Vice-President Jyrki Katainen said Brexit is a 'problem' for the EU budget

We need to adjust the budget to a certain extent but also we need fresh money from member states

Jyrki Katainen - European Commission Vice-President

“We also have to look at how money is spent, how we could get more out of less."

Many members are concerned about paying more to compensate for Britain’s decision leave the EU.

Mr Katainen told CNBC that a possible solution could be using more financial instruments, including equity investments, to finance European projects rather than direct financial contributions.

He said: “This is what we are planning or exploring at the moment… it's going to be a very though negotiation.” 

Brexit negotiations continue, live pictures

Fri, December 8, 2017

AFP/Getty Images

1 of 14

David Davis and EU's chief Brexit negotiator Michel Barnier attend a press conference by Theresa May

At the conclusion of phase one of Brexit negotiations last year, European Commission President Jean-Claude Juncker, said the “real negotiations on the second phase will start in March” this year.

However, talks could begin sooner as EU diplomats announced today that Britain’s Brexit negotiators are expected to launch fortnightly rounds of talks in Brussels from as early as next week.

Further discontent amongst EU countries also emerged today when the Netherlands opposed the proposal for richer nations to bail out poorer members struggling to perform in the eurozone.

The Netherlands prime minister Mark Rutte said: “I’m against risk sharing. I’m against this idea of a transfer union.”


Netherlands prime minister Mark Rutte wants to introduce reforms to reduce the bloc’s debt

He also called on other EU members to introduce reforms to reduce the bloc’s debt.

“We need something to deal with sovereign debt restructuring. Which is part of how can we bring down the overall level [of debt]”, he added.

In a speech last year Jean-Claude Juncker spoke about the choice EU member states face regarding the bloc’s budget.

He said: “Either we pursue the European Union's ambitions in the strict framework of the existing budget, or we increase the European Union's budgetary capacity so that it might better reach its ambitions. 

“I am for the second option."

Related articles