Interview with Dr. Michael Lloyd, researcher at The Global Policy Institute: “The actual budgetary impact of Brexit will be only 6%”

The UK was one of the great contributors to the European budget, but also one of the staunchest opponents of increases of it. Which are the consequences of Brexit over the EU budget?

Dr. Michael Lloyd, senior researcher at the Global Policy Institute in Washington D.C. has expertise in the economics of the European Union, including monetary and transport economics. He is preparing a book on the Euro. He explained in an interview given to Vladimir Adrian Costea, for Europunkt, how Brexit will influence the European budget.

Citeşte versiunea în limba română aici.

Vladimir Adrian Costea: What is the contribution the UK currently brings to the EU budget?

Michael Lloyd: The UK was liable for an £18 billion payment into the EU budget. However, adjusting for its rebate of £5 billion, it paid in as net amount of £13 billion and received £4.5 billion. 55% was spent on agriculture and fisheries; 25% on structural fund assistance; 18% on research, and 2% on admin.

What is the effect of Brexit over the EU budget? What are the main areas that will be affected?

The removal of the UK net contribution will mean a loss of just over 9% of the total EU budget. However as payments of £4.5 billion to the UK will not be made the actual budgetary impact of Brexit will be only 6% (assuming the commitments made by the UK in terms of the EU Multi-annual budget running up to 2020 are met, then the overall  impact on the budget may initially be reduced further).

To what extent is it plausible the scenario of increasing the amounts allocated by the member states to the EU budget?

It is perfectly plausible that this 6% shortfall could be made up by the remaining 27 countries. however, the burden would fall mainly on the net contributors, e.g. Germany and Netherlands.

Do you consider that the EU-27 can meet its objectives effectively using a lower budget?

The alternative would be to cut the budget by 6%. However, the budget is already low and represents only 1% of the member states total GDP.

To what extent the EU-27 budget will represent a potential source of conflict between Member States?

The EU budget is always a source of conflict between Member States. However, the UK has always been the country pressing most strongly for reductions in the overall budget and its removal will reduce the potential conflict, to an extent.

Reducing the budget can be an opportunity for the opponents of the European Union?

Despite the previous response there will still be opponents of increasing the budget at a time when Euroscepticism is increasing and when Germany and Netherlands are net contributors.

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Michael Lloyd has considerable professional and commercial experience. Following three years as an Economic Assistant at the TUC, from 1973 to 1980 he was a European Commission Official, principally based in the UK. He left in 1981 to become Director of International Affairs at British Shipbuilders. From 1984 until 1997 he ran an economic consultancy company concerned with European economic and technology consultancy to private and public organisations. He was Economic Adviser to the European Parliament on economic and monetary union during 1997/1998 and subsequently became Director of AMRIE (Alliance of Maritime Regional Interests in Europe), working on a number of European RTD projects, before retiring as Director in May 2008 to concentrate on his economic research and consultancy work.