Subscribe or upgrade your account to read:

Angela Merkel demands Germany retain EU budget rebate

EU common budget

Angela Merkel demands Germany retain EU budget rebate

Chancellor says Berlin faces ‘excessive burden’ as a result of Brexit

Angela Merkel has called for 'fair' burden-sharing for EU member states once Britain leaves the bloc © CLEMENS BILAN/EPA-EFE/Shutterstock

Angela Merkel, the German chancellor, has demanded Germany retains its rebate as part of the next EU budget, saying Berlin faced an “excessive burden” as a result of Britain’s exit from the bloc.

She was addressing the Bundestag ahead of a key EU summit in Brussels that will look at the bloc’s next long-term budget. The spending plan, which runs for seven years, needs to be agreed by the start of 2021.

Negotiations on what is known in Brussels as the Multiannual Financial Framework (MFF), will be unusually tough: Brexit has blown a hole in the budget and all member states will have to chip in more.

But there is disagreement on how big the budget should be. Germany, along with other big net contributors such as the Netherlands and Austria, wants it to be capped at 1 per cent of the EU’s gross national income, while the European Commission has proposed 1.1 per cent.

Ms Merkel said that even a figure of 1 per cent would entail a “clear increase in contributions” from Germany. Officials in Berlin say Germany would have to pay €40bn gross on average, €10bn more than it currently chips in.

€30bn

Germany’s estimated net contribution to the EU budget in 2027, compared with €13.5bn last year

“Due to this increase, and Britain’s imminent exit from the EU, Germany will be excessively burdened when it comes to the MFF,” she said. “For that reason we have to talk about fair burden-sharing on the financial side and a rebate for Germany.”

The European Commission wants to scrap all rebates for net paying member states after Brexit.

Germany’s net contribution to the EU budget would rise to €30bn in 2027 as the rebate is gradually phased out, according to an EU diplomat. Last year the German net contribution stood at €13.5bn.

Some of the big net contributors to the bloc’s budget already benefit from the rebates, which originate in the discount over “excessive” UK payments for EU farm subsidies that Margaret Thatcher won from the EU in Fontainebleau 35 years ago.

These “compensatory mechanisms” cap the amount richer countries pay in. Mark Rutte, the Dutch prime minister, has argued that such rebates keep the system “fair”.

Germany, the Netherlands, Denmark, Sweden and Austria are demanding they be retained.

France is the biggest champion of scrapping the rebates, and a group of net receiving member states such as Poland, Hungary and Baltic countries also support their abolition.

Ms Merkel also told MPs she supported the principle that the disbursement of EU funds be linked more closely to respect for the rule of law in member states, saying the issue was of the “highest priority” for Germany.

Copyright The Financial Times Limited . All rights reserved. Please don't copy articles from FT.com and redistribute by email or post to the web.

Content not loading? Subscribers can also read Angela Merkel demands Germany retain EU budget rebate on ft.com