UK Eyes Big Payments to the EU as Shortfalls Loom
Rumours abound that the United Kingdom is positioning itself to make massive payments to the European Union to secure a Brexit deal. The programs being targeted in these upcoming deals are found in areas such as science and research. There are opposing factions in the Brexit quagmire, and government is considering all options when it comes to buying their way out of the EU.
Brexiteers are fully aware of the budget shortfall that the European Union currently faces – £15 billion per year. The UK is a major contributor to EU coffers, and its absence will place a significant burden on existing states like Germany, France, Italy and others. However, none of these countries are prepared to take up the cudgels and meet that budget shortfall.
According to insiders, money is really all that the European Union cares about. If Britain can exit the EU single market on favourable terms, it may be willing to pay for that privilege by contributing substantially to the EU. The benefits of such a move would allow Britain to access its most important trading bloc, by providing the EU with enough cash to meet its needs. Bremainers are hoping that the UK Prime Minister can carve out a deal with EU legislators in the mould of a Norway-style trade agreement.
The Norway Agreement and Its Applicability to the UK
The arrangement that Norway currently has with the European Union is unique. Norway currently enjoys significant trade with EU countries, and it remains the fifth most strategically important trading partner with the EU. It is not a full member of the EU, yet it is a dominant member. Norway’s part of the EEA (European Economic Area) which gives the Scandinavian country unfettered access to the European Union’s internal market.
This allows for trade of goods and services sans customs fees, on all products except food and drinks. Those are subsidized by the European Union. For its part, Norway is obligated to comply with the EU directives relating to the internal market meaning that it is 75% compliant with EU legislation.
According to preliminary reports, Britain would make these payments to the EU, to help it in its budget shortfall. While Brexiteers do not want to be responsible for the EUs budget problems, the Bremainers are hoping that the UK can remain an active component of the European market. By funnelling funds into different sectors of the EU economy, the UK can remain an intractable component of the single market.
It would also give Prime Minister Theresa May leverage to push for the type of trade deal that she’s seeking. For its part, the UK is hoping to make payments to cover programs that the UK was involved in. The UK’s absence will hurt these initiatives, given that it is a significant contributor.
No More Backdoor Deals
The French president believes that Britain may be privy to a special trade deal, but it must abide by European Union rules and regulations to enjoy that privilege. A big part of the reason why Britain exited the EU is the extortionary annual payments it had to make to Brussels. The Brexit bill is estimated in the region of £39 billion, and hardliners in May’s cabinet are opposed to this.
Prime Minister May repeatedly promised that substantial payments would not be made to the EU, and EU officials are gearing up to contest Prime Minister May’s plans to pay for the right to exit through Brexit, and remain through £15 billion payments. The UK wants to remain out of the single market after Brexit, while Norway remains in the single market.
What are your thoughts on the proposed £15 billion payments? Should Britain make this deal to enjoy EU market access?
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About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.