The member states of the European Union (EU) on Thursday approved the position of the Council, chaired by Portugal, on the reserve of €5 billion to mitigate the immediate impact of the withdrawal of the United Kingdom from the EU bloc.
At stake is the reserve created by the EU to support the economic sectors most affected by the UK’s exit from the single market, whose draft regulation will now have to be negotiated with the European Parliament.
“The fund, known as the Brexit adjustment reserve, will focus on the most affected regions, areas and sectors in the EU and will be used to support a variety of measures, such as compensating companies for lost trade, maintaining […] employment and setting up customs controls at ports,” the Council of the EU noted in a press release.
The Council’s position is for a period of four years, from 1 January 2020 to 31 December 2023, meaning that costs incurred during this time as a result of Brexit can be fully or partially covered.
The support could be for assistance to businesses and fishing communities, short-term work schemes and retraining programmes, borders, customs, sanitary and phytosanitary controls, indirect tax collection and reintegration of EU citizens who left the UK due to the exit.
In line with the policy to strengthen cohesion across the EU, the country allocation method considers the uneven impact of Brexit on different regions and sectors.
According to the Council’s position, the €5 billion (at 2018 prices) 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 the UK and the population of maritime border regions with the UK.
It follows a discussion between the co-legislators, and it is now up to the European Parliament to approve its position for the talks to move forward.
Portugal hopes for an agreement before the summer break so that the first instalment can be disbursed before the end of the year.
Reacting to the approval on behalf of the Portuguese presidency of the Council of the EU, the foreign minister, Augusto Santos Silva, quoted in the statement, said that “the reserve aims to support all member states to combat the negative consequences of the UK’s exit”.
“In a spirit of solidarity, we are committed to helping European regions, businesses and citizens, and especially the hardest-hit communities, to face the unprecedented challenges of Brexit,” he said.
The €5 billion fund was agreed to last year by EU leaders as part of the 2021-2027 budget.
According to the European Commission’s proposal, Portugal should receive at least €58.3 million in the first tranche to be distributed this year.
Ireland and the Netherlands should be the main beneficiaries.
The post-Brexit agreement between the EU and the United Kingdom allows both parties to continue trading without quotas or tariffs after the country’s exit from the EU bloc, but such a protocol does not avoid new costs and bureaucracy for European companies doing business with London.