As the Brexit transition period ends on December 31st, the European Commission, upon the European Council’s approval, prepares by putting forth a proposal to create a Brexit Adjustment Reserve.
“The end of the transition period on December 31st will have an important economic and social impact on regions and local communities that are mostly linked to the UK’s economy and trade,” says Commissioner for Cohesion and Reforms Elisa Ferreira.
The Brexit Adjustment Reserve’s creation would ensure that member states or sectors that are most affected will receive support, she adds.
According to the proposal, the Reserve will have an overall budget of €5 billion. It will support businesses and employment, assist regions and local communities, and help public administrations of the border, customs, sanitary, and phytosanitary controls.
Commissioner for Budget and Administration Johannes Hahn said they designed the Reserve to provide swift and uncomplicated financial help to the EU Member States. It will set the Reserve up as a special instrument outside the EU budget ceilings mandated by the Multi-annual Financial Framework 2021.
“The powerful new EU budget will support this work,” Hahn shared.
Brexit Adjustment Reserve Scope and Measures of Support
The Brexit Adjustment Reserve will offer rapid and flexible support to affected member states and businesses. The eligibility period for expenses will run for 30 months, which will allow member states to design appropriate measures against Brexit’s impact. The actual support will be distributed in two rounds:
- A pre-financing was taken mainly from the initial allocation of €5 billion. The amount will be calculated based on the expected impact of the end of the transition. The Commission will consider the relative degree of economic integration with the UK and Brexit’s effect on the trading of goods and services, and the negative impact on the EU fisheries sector;
- A tranche of additional support in 2024, if the actual expenditure exceeds the initial allocation of €5 billion based on the expense incurred and declared to the Commission. If the expenditure exceeds both the amount of the pre-financing and 0.06% of the nominal GNI of 2021, then the member state will receive an additional amount from the Reserve.
The Reserve will offer:
- support to businesses and local communities, including sectors dependent on fishing in the UK waters;
- support the employment sector, which includes short-time work schemes, re-skilling, and training
- safeguarding the function of the border, customs, sanitary, phytosanitary, and security controls, fisheries control, certification and authorization regimes for products, communication, and information dissemination.
To qualify for reimbursements, the member states will need to prove that their claims are directly related to Brexit. The standard financial control and management system for EU funds will still apply.
Future Resources and Steps
The Reserve’s budget allocation will be under shared management between the member states. This system will make full use of sound financial management principles, transparency, non-discrimination, and the absence of conflict of interest.
The Commission’s proposal also states the responsibilities and requirements for the member states and the implementing bodies responsible for managing, controlling, and auditing the financial contribution. This system should make the process legal and straightforward, and easily accessible if needed as soon as the withdrawal period starts.
Also, to avoid extra financial and administrative burdens, the member states could use existing systems for cohesion policy funding or the European Union Solidarity Fund.
The Parliament and the Council will have to adopt the proposal before establishing the special Brexit Adjustment Reserve to counter unforeseen and adverse consequences for the Member States and the worst affected sectors.
Leave a Reply