EU budget: Brussels unveils plans for higher spending on defence and border control

European Commission moves to replace revenue lost from Brexit

The European Commission has unveiled its plans for a bigger continent-wide EU budget to finance new priorities including defence, border control, and international aid.

The €1.135 trillion (£1 trillion) proposal unveiled by president Jean-Claude Juncker in Brussels on Wednesday would spend 1.1 per cent of the bloc’s GDP, with higher contributions for member states and cuts to some spending areas to make up for lost payments from Brexit.

The so-called “multi-annual financial framework” proposal fires the starting gun on a series of complex rows between member states over how money should be allocated and raised for the seven-year spending plan – with leaders set to hash out a deal over the coming months.

Within hours the French agriculture ministry branded a “drastic, massive and blind cut” to agricultural subsidies as “simply unthinkable”, while Dutch prime minister Mark Rutte conversely said he would resist planned increases in the Netherlands’ contribution and push for a smaller budget.

Poland’s deputy foreign minister Konrad Szymanski said his country “appreciates” moves by the Commission to keep cuts to funding for the poorer eastern member states “minimal”, accepting that predicted “black scenarios” that would leave Poland with holes in its own heavily subsidised investment plans did not materialise.

German Foreign Minister Heiko Maas and Finance Minister Olaf Scholz said in a joint statement that the budget would “considerably increase” their Germany’s contributions to the budget and that while they were “willing to fulfill our responsibilities for strengthening the European Union” they wanted “fair burden-sharing of all member states”.

Presenting the spending plan the Commission president Mr Juncker said the spending plan would be “bigger than the preceding one, because it will determine the future of our Europe of 27” members.

The economic wind in our sails gives us some breathing space

Jean-Claude Juncker

He said Commission officials “have put forward a pragmatic plan for how to do more with less”.

“The economic wind in our sails gives us some breathing space, but doesn't shelter us from having to make savings in some areas,” he said.

Agreement over the spending plan is likely to be particularly difficult this round because of the revenue hit caused by Britain’s departure. Brussel is hoping that the budget will be settled in full before the European Parliament elections scheduled for May 2019 next year.

Though Britain is leaving the EU in March 2019 it has agreed to pay its share of the budget until the end of 2020, when its transition period will end and it will no longer benefit from EU policies. This simplifies the procedure as 2021 is also the start of the new Budget round.

Any extended Brexit transition period that overlapped into the budget round would require the UK to make further contributions – the Commission notes there might be “potential additional contributions by the United Kingdom honouring its obligations assumed as an EU Member State that have to be paid beyond 2020”.

The Commission has estimated that the UK's departure will cut budget contributions by around €12 billion a year. The UK's departure has also given the Commission the opportunity to propose the end of rebates given to some other countries, of which the UK's was by far the largest.