Ireland could lose more than €200m from its promised €1bn share of the Brexit compensation fund after France won EU backing in its bid to get more money.
The Portuguese-brokered compromise was reached this week.
The move needs to be approved by the European Parliament, whose lead negotiator, French MEP Valérie Hayer, said the European Commission’s original proposal – in which the bulk of the money went to Ireland – was unfair.
Under the new compromise, countries will be allocated money based on the importance of UK trade to their economies, as well as their share of total EU trade, which favours larger countries. Fianna Fáil MEP Barry Andrews likened the French approach to a “smash and grab”. “We are very disadvantaged by it,” he told the Irish Independent.
“We are going to keep fighting it but it’s hard to know where it’s going to land.”
France has the backing of Spain and Italy but its position is opposed by Ireland, Belgium and The Netherlands.
The Portuguese government, which holds the EU’s six monthly rotating presidency, said it had reached a “balanced compromise”.
“The reserve aims to support all member states to counter the negative consequences of the UK’s withdrawal,” said Portuguese foreign minister Augusto Santos Silva. “In a spirit of solidarity, we are committed to help European regions, companies and citizens, and especially the hardest hit communities, to tackle the unprecedented challenges of Brexit.”
Meanwhile, Ireland had failed to submit a plan to the European Commission for access to the bloc’s pandemic fund by yesterday’s target date.
Although it’s not a hard deadline, France and Germany sent their recovery plans to the EU earlier this week, to much fanfare.
In a joint press conference, German finance minister Olaf Scholz said the two were “partners for driving the European project forward”.
Ireland has been allocated around €900m from the bloc’s €750bn pandemic recovery fund, but the money comes with conditions, which the Brexit reserve does not.
Payments are linked to the economic reforms recommended by the Commission each spring, which for Ireland include requests to tackle corporation tax, housing and clean energy.
Mr Scholz and his French counterpart Bruno Le Maire told the Irish Independent this week that it was not their “style” to pressure governments on taxation.
Ireland did manage to send an updated budget outline – or “stability programme” – to the Commission by the Friday deadline.
It predicts the Irish economy will grow by 4.5pc this year and 5pc in 2022, with modified domestic demand – a more useful indicator of the domestic economy – projected to grow by 2.5pc this year and 7.5pc next year.
However, unemployment is expected to average over 16pc this year and more than 8pc in 2022.