The British decision to leave the European Union (EU) was influenced by the debate about the EU budget, but it is the opposite also true? Will British withdrawal have a decisive influence on the EU budget? In this policy paper, Jörg Haas and Eulalia Rubio estimate how Brexit would impact the EU’s public finances. The authors draw up four scenarios that outline how the EU could react to the expected budget shortfall after Brexit and provide estimates of how the individual Member States might be affected by the different options. They analyse the political implications of these four scenarios for the upcoming negotiations about the next Multiannual Financial Framework (MFF), which will start in 2018.
Overall, the paper concludes that Brexit could have a quite significant, although not devastating, impact on the EU budget and would likely deepen the existing cleavage between ‘net contributors’ and ‘net recipients’. This poses a number of tough challenges for the EU but could also support efforts to reform the current system.