Guest article: Brexit and the European Union budget. Impact on Romania. Preliminary thoughts

I want my money back” (Lady Margaret Thatcher)

Everyone in these hot summer days speak about Brexit and its impact upon the EU future. If a lot of relevant analysis have been already done on areas of outmost importance such as politics, security, migration and so on my small piece shall focus on the impact that this huge geopolitical event would have upon the EU budget and by default on Romania and the European funds it uses.

For me one thing is clear – Romania would lose EU funds after the United Kingdom would withdraw from the European Union. This is the biggest risk for Romania because our country, unlike our neighboring countries from Central Europe, has a reduced capacity of absorption of EU funds and thus we would be last ones and there would be no more money for us.

Any positive expectation that someone might have is immediately shutter if we think to the share of the UK contribution in the EU total budget.

EU budget 2015. UK share.

EU budget 2015. UK share.

So the billion euros question is : how to fill that black hole if UK’s contributions to the EU budget stop in years to come?

A series of scenarios have been already presented on the market, yet the most likely would the one of a bitter compromise where the big net contributors will agree to give a little more while the big net recipients in Eastern and Southern Europe will agree to receive a little less (the “game of nip and tuck” ) (EU budget: the post-Brexit challenges for London and Brussels)

 “It is the “game of nip and tuck” scenario that worries the most the Eastern members of the European Union and it would be a hard ball to sell to domestic audience and moreover it would a direct impact on the European Regional Development Fund and Cohesion Fund – a July 2016 done by the Romanian government, based upon IMF and European sources, presents an estimated automatic reduction of 10% of the amount of these funds, up till 15%, and mention a 2017 European Union budget revision and possible changes of its structure, dimension and content” (Mihai Sebe, Die another day. Brexit and its impact upon the European Union. A view from Romania).

Things are only now starting to reveal themselves and it is our obligation as consultants to take into consideration also these macroeconomics and political risks and try our best to adapt in order to better serve our clients. We also need to do our best and try to use the funds available this year, and for this a strong cooperation is needed from all the parties involved.

by Aurelia-Ioana Brînaru

* Aurelia Ioana Brînaru, PhD, is a Structural Funds consultant. Experienced in Structural Funds accession and management in the field of agricultural funds, Mrs. Brînaru’s main fields of expertise and interest are the following: management of projects financed from Structural Funds, writing financing projects, the ethics of Structural Funds, property assessment.
 brexit HQ 001-01