EU27 ministers on Thursday (29 April) agreed their position on a four-year Brexit Adjustment Reserve designed to help businesses cover losses and the additional costs imposed under the new post-Brexit trade agreement with the UK.
The €5 billion fund which was agreed as part of the EU’s seven year budget framework, covers the period between 1 January 2020 and 31 December 2023.
Under the position taken by national governments, the €5 billion will be provisionally allocated upfront, with each member state’s share determined by factors such as the value of fish caught in the UK’s exclusive economic zone, the importance of trade with Britain and the population of maritime regions bordering the UK.
The list of eligible programmes which member states can spend the money on includes assistance to businesses and fishing communities, short-term work schemes and retraining programmes, border, customs, sanitary and phytosanitary checks, collection of indirect taxation, and reintegration of EU nationals who have left the UK due to the country’s withdrawal from the European Union.
Portuguese foreign minister, Augusto Santos Silva, whose country holds the six-month rotating EU Council presidency, said that “the reserve aims to support all member states to combat the negative consequences of the UK’s exit”.
The EU’s fishing sector is expected to be badly hit by the new post-Brexit trade deal, the EU-UK Trade and Cooperation Agreement. Under the compromise reached by the two sides, the EU agreed to give up 25% of the value of fish quota caught by EU boats in UK waters over a five-and-a-half-year adjustment period.
French Europe Minister Clément Beaune has accused the UK of blocking fishing rights for his country’s fishing community, warning that the EU should be prepared to respond with tit-for-tat measures restricting the UK’s access to Europe’s financial services markets if the dispute persists.
The UK is Ireland’s biggest trading partner in food products and will be the main beneficiary, receiving over €1 billion from the fund, followed by the Netherlands which is set to receive €757 million, Germany €455 million, and France €420 million.
For its part, the UK government has also introduced a number of support programmes for its businesses affected by the new customs checks on products growing to the EU.
On Tuesday (27 April) MEPs formerly ratified the trade deal that now governs economic relations between the UK and EU and includes tariff and quota free trade in goods. However, the Trade and Cooperation Agreement is already adversely affecting trade flows between the EU and UK.
Earlier this week, the UK Food and Drink Federation reported a fall in sales to the EU of 40.9% compared to February 2020.
“While UK food and drink exports to the EU have improved from a 76% fall in January, they are still down nearly 41% in February 2021,” said Dominic Goudie, Head of International Trade at FDF.
“Exports to our biggest market, Ireland, have also dropped more than two thirds,” he added.
Lawmakers now hope to finalise agreement with the European Parliament on the fund before the summer recess, so that the first cash instalments can be disbursed before the end of the year.