Wednesday, 14 September 2016

EU starts to realise how much Brexit will cost it

An excellent piece in Der Spiegel on the costs of Brexit to the EU sets out what we already knew in terms of the UK budget contribution. The loss of a net 12.7bn€ a year will mean Germany will in future have to pay 25% of the EU's budget - with the other 26 states sharing the remaining 75% cost. With the costs of resettling a million migrants and the country's basic infrastructure now tired to the point of collapse and in desperate need of investment, this will put some strain on Europe's wealthiest nation. 

However, it gets worse. I never knew much about the EIB and the UK's stake in it. It seems we have some 40bn€ in share capital - 16%. The EIB can lend 2.5x its share capital. They're worried that if we take our 40bn€ back, the bank's loan ceiling reduces by 100bn€. Of course the UK has some outstanding loans - but we've made the least use of any EU member of the facility, and despite having 16% of the share capital have only 8% of the loans. Again, all eyes will be on Germany to make up the shortfall. 

Of course, the EU could slash its budget - taking the UK's 13bn€ contribution from the CAP would still leave 42bn€ in place, for example. But the French, who hog the lion's share of the CAP, would never agree to a 24% cut. 

With the Eurozone economy still pretty much flatlining, don't expect Mrs May to be popular in Europe, and in particular Germany, in the near future.


Anonymous said...

An economy that is in serious trouble needs something radical to avoid a collapse. There are of course those who deny anything is wrong and continue to spend, and spin, like nothing has happened:

People across Europe would not endorse a European Army


John M said...

Well U hope the Germans have a word with Mr Juncker too, who decided to announce how the EU will tighten it's budget by today announcing formal plans for a EUropean Army, with it's own headquarters, officers and of course bureaucrats.

Presumably as the ex-Prime Miinister of Luxembourg, Juncker is a stranger to the costs of maintaining and equipping and army.

Anonymous said...

Doesn't stop the bastard wanting to play soldiers.

Budgie said...

The EU is manifestly deranged in its political intrigues, interference, corruption, profligacy, lack of democracy, and its willingness to sacrifice the little people in Greece, Spain or anywhere else, to promote itself.

Not surprisingly, since it is supra national, it cannot be anchored by the reality of people's everyday experiences, as a democracy is. Only real democracy - our Referendum, or other "wrong" results - has ever given the EU pause for thought.

If Brexit speeds the process of EU disintegration by depriving the EU of its lifeblood, our cash, so much the better. That makes Brexit a benefit not only for us in the UK but for the rest of Europe too.

Dave_G said...

I don't think 'money' has much to do with anything if previous examples are to be taken into consideration. If they don't have the funds they simply print more.

Of course this can't go on forever but whilst the EU remains in existence they'll do whatever it takes to carry on the deception until either the fraud is exposed/exlodes in their face or the EU collapses. The end result is the same regardless.

In an ideal world Mrs May could use the considerable leverage this position affords the UK to make and GET the demands she cares to make of Brexit but with EU intransigence I suspect they'd throw the baby out with the bath water rather than do the right thing.

DeeDee99 said...

Meanwhile, Juncker has plans for "more Europe" and more spending, in the form of an EU Army and all the bureaucracy to back it up..... natch.

He won't be able to argue that "pooling armed forces" will save money since the vast majority of the EU members spend next to nothing on defence and only have toytown soldiers.

G. Tingey said...

VERY interesting comments by von Rompoy (sp?) yesterday ... saying that nothing will happen until October '17, because of German elections ....

And hinting that it's going to be a disaster for the EU.

This gives May enough rope to spin out the nutters on both sides & exploit all of theor weaknesses.
Fun times!