The confirmation that Ireland is to pay an extra €280 million in EU budget contributions next year may be unpalatable news, but it is unlikely to be avoidable.
EU member states signed off on the 2017 budget this week, but it now goes to the European Parliament for approval. A final agreement will be reached in October when the figures are confirmed by Eurostat. Ireland’s final contribution will depend on GNI re-evaluations in other member states, leaving open the possibility that Ireland could face a lower – or higher – payment.
The decision about how much money the EU should spend is made every seven years when the EU budgetary cycle known as the MFF (multi-annual financial framework) is agreed. Within the broad MFF framework, specific targets for each year are worked out annually by the European Commission and national contributions revised when the economic data for each year becomes available.
Rules
The nasty surprise that confronted Ireland this week was experienced by Britain in 2014 – when Britain had to pay an extra £1.7 billion into the budget, due to a one-off revaluation by Britain’s Office of the National Statistics (ONS) of the size of the charity and NGO sector.
As with last week’s controversy over the CSO’s figures, there were accusations that the ONS had played “too safely” by the rules. Like the UK Chancellery in 2014, the Department of Finance in Dublin knew extra contributions were coming, but underestimated how big the extra contributions would be.
Net contributor
There appears to be little chance of Ireland receiving special treatment, given the huge financial contributions the country has received from Brussels. Even though Ireland has moved from being a net recipient to a net contributor, it still benefits from EU funding, through the Common Agricultural Policy (CAP), research funding, cohesion funds and programmes for the North.
And while the public may be smarting from the news about the extra €280 million, more bad news is on the way.
Brexit opens up enormous problems for the EU budget and is likely to lead to bigger contributions from member states, including Ireland.
While the Leave campaign’s claim that £350 million goes to Brussels each week may have been unfounded, Britain still contributes a staggering £9 billion a year.
As the second-largest contributor, Britain’s exit will generate a financial hole that will have to be filled. Countries will face the choice of increasing national contributions to meet the shortfall or accepting a smaller EU budget, with knock-on effects to EU spending on agriculture and research.
Meanwhile, Ireland is likely to get little sympathy from fellow EU members about its extra budget obligations, given the antagonism towards Ireland’s corporate tax regime.
Some may even delight in the irony that it is Ireland’s high-dependence on multinational activity that is driving its higher budget costs.
