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Finland won't make up EU budget deficit post-Brexit, warns Finance Minister

Finland won't pay up to fill the gap in the European Union's budget caused when Britain leaves the EU, according to Finance Minister Petteri Orpo.

Petteri Orpo
Petteri Orpo Image: Vesa Moilanen / Lehtikuva

Brexit could leave a seven billion euro hole in EU finances, but Finland won't increase its payments to cover the bill. That was the message from Finance Minister Petteri Orpo on Thursday in Brussels.

At present the United Kingdom pays in some 7 billion euros more to the EU budget than it gets back in subsidies, grants and structural funds. That will change when Britain leaves the union, as is now UK government policy following a referendum in 2016.

EU officials hope to extract payments from the UK when it leaves, to cover costs agreed in the current budget and other issues like pension payments to British EU officials. Even so, there is likely to be a significant shortfall.

Speaking during a meeting of Eurozone finance ministers on Thursday, Orpo said that the budget would have to be balanced through spending cuts, not increased payments from net payers like Finland.

Brexit offers chance for reform

"The hole left by Britain's departure cannot increase our net payments, it must be found from savings within the budget," said Orpo.

The EU's total annual budget was 155 billion euros in 2016, while Finland's net payment in 2015 was 488 million euros. Orpo did not take a view on where exactly in the budget savings should be found. The biggest line items are structural funds (34 percent of the total) and agricultural subsidies, at 41 percent.

Finland has benefited from both pots of funding.

Orpo says that the next budget negotiations, for the budget period beginning in 2021, offer an opportunity for broader reform of EU spending. The Finnish government's policy is that more of the cash should go towards newer issues like immigration, employment and security.

The future of the EU budget is also under consideration by a high-level working group chaired by Mario Monti, which is presenting its report on Friday. The report argues that EU-level taxes on business, carbon or carbon trading could go straight to the EU, rather than burdening member states with footing the whole bill for the union.

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