In May 2018, the European Commission published a first proposal for the next Multiannual Financial Framework (MFF) of the European Union (EU) for the period from 2021 to 2027. Most Member States are assessing this proposal – as has been the case for the proposals for the EU budget negotiated in the past – based on their own individual net positions: that is, the balance of payments made into the EU budget and transfers received out of it. Indirect benefits from membership in the Single Market and from EU expenditures, which considerably exceed Member States’ contributions to the EU budget, are almost completely neglected. This juste retour thinking predominant among Member States bears the danger that the negotiations on the upcoming MFF 2021-2027 will be as tedious and lengthy as those on preceding EU budgets, and that they will end, once more, with an agreement on an EU budget that is unsatisfactory with regard to its volume and structure. The current deadlock situation can only be overcome by strengthening the added value of the EU budget when it comes to expenditures as well as revenues. This requires a fundamental reform of both sides of the EU budget.
The chapter focuses on the impact of the Brexit on the EU budget. Departing from the hypothesis that the Brexit may act as a catalyst for fundamental reforms within the EU budget aiming at strengthening the added value of EU expenditures and revenues, the chapter sketches the pillars of such far-reaching reforms. It then provides an overview of the expected financial implications of the Brexit. The current status of the UK–EU Brexit negotiations implies a twofold financial impact of the Brexit, comprising the one-off “Brexit bill” or “divorce bill” and the permanent “Brexit gap”. Against this background, the chapter closes with a brief first assessment of the European Commission’s proposals for the next Multiannual Financial Framework. To cover the Brexit gap and to finance the new priorities, the proposals foresee an increase in national contributions as well as new own resources.