IDEAS home Printed from
   My bibliography  Save this paper

Rethinking the European Union’s post-Brexit budget priorities


  • Zsolt Darvas
  • Guntram B. Wolff


This Policy Brief is a version of a paper written as a contribution to the Bulgarian EU Presidency conference on the Multiannual Financial Framework, Sofia, 9 March 2018. The authors are grateful to Yana Myachenkova, Nicolas Moës and David Pichler for excellent research assistance. This paper is accompanied by an annex available here. The issue The European Union’s budget is fundamentally different from the budgets of federal countries and amounts to only about one percent of the EU’s gross national income. The literature shows that the Common Agricultural Policy (CAP), which takes 38 percent of EU spending, provides good income support, especially for richer farmers, but is less effective for greening and biodiversity and is unevenly distributed. Cohesion policy, 34 percent of EU spending, contributes to convergence but it is unclear how strong and long-lasting the effects are. Spending on new priorities such as border control could require additional funds of at least €100 billion for the 2021-27 period. In addition, EU budgeting is based on a complex and outdated methodology. Policy challenge There will be a €94 billion Brexit-related hole in the EU budget for 2021-27 if business continues as before and the United Kingdom does not contribute. EU countries might be reluctant to increase contributions to fill this hole while also covering spending on new priorities. We show that freezing agriculture and cohesion spending in real terms would fill the Brexit-related hole, but new priorities would then need to be funded by an increase in the percent of GNI contribution. Freezing in nominal terms – thus cutting in real terms – would generate enough to cover most of the new priorities. This would be topped-up by a UK contribution if a EU - UK deal is reached. A fundamental overhaul of the EU budget, including its methodology, is crucial. The reference to the work of Lars Hoelgaard (2018) has been corrected on 20 March 2018.

Suggested Citation

  • Zsolt Darvas & Guntram B. Wolff, 2018. "Rethinking the European Union’s post-Brexit budget priorities," Policy Briefs 24758, Bruegel.
  • Handle: RePEc:bre:polbrf:24758

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Fratesi, Ugo & Perucca, Giovanni, 2014. "Territorial Capital and the Effectiveness of Cohesion Policies: an Assessment for CEE Regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 29, pages 165-191.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:ces:ifosdt:v:71:y:2018:i:12:p:03-26 is not listed on IDEAS
    2. repec:onb:oenbfi:y:2018:i:q3-18:b:7 is not listed on IDEAS

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bre:polbrf:24758. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruegel). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.