Germany's EU bill to rise by 16 percent post-Brexit: report

Germany will need to pay an extra €3.8 billion into the EU's coffers once Britain leaves the bloc. A new report, which is likely to rile German taxpayers, suggests France and Italy will face much lower budget hikes.

Germany is being threatened with significantly higher contributions to the European Union's budget when Britain completes its departure from the bloc in 2019.

The Funke-Mediengruppe newspapers on Friday cited a report by the European Parliament, suggesting that the Berlin government would suddenly be on the hook for an extra €3.8 billion ($4.2 billion), a rise of 16 percent. In 2016, Germany's net contribution — minus EU monies returned to fund projects in the country — amounted to €15.6 billion.

By comparison, France would face an additional €1.2 billion per annum bill on top of its €5-6-billion net contribution, and Italy would pay an extra €1 billion.

"Brexit does not just increase the financial burden for the EU-27, but also changes the distribution of that burden," the newspaper group cited the report as saying.

Read more: 50 London banks in talks for post-Brexit move

Germany, the Netherlands and Sweden currently benefit from reduced payments due to Britain's EU membership, it said.

Britain is currently the second largest net contributor to the EU after Germany; its departure is expected to leave a €10.2-billion hole in the EU's finances.

EU austerity needed?

The EU study says discussions are underway about whether cuts should be made to the EU budget or whether new revenue sources can be opened up, including taxes.

The budget gap revelations come as British negotiators meet with their EU counterparts in Brussels for the sixth round on Brexit talks, in an attempt to settle the country's financial obligations to the bloc. The EU has set a figure of €60 billion, while British officials have, to date, offered just €23 billion.

On Thursday, the Financial Times cited an anonymous EU diplomat as saying that the UK government had been given a three week deadline to improve its offer.

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At stake is Britain's future trade deal with the EU, which Brussels has refused to discuss until the financial settlement has been finalized.

Meanwhile, Germany's largest industry group BDI said on Friday that it would be impossible to reach a comprehensive deal on future economic relations between the EU and Britain within the two-year deadline. In doing so, it added its voice to growing calls for a transitional arrangement where Britain remains in the EU's single market and customs union for a longer period.

Read more: Brexit: Why people are increasingly talking about the 'Norway model'

The group last month told German firms in the UK to prepare for the possibility of a so-called hard Brexit, where Britain quits the bloc without a trade deal.

BDI Managing Director Joachim Lang is due to meet British Prime Minister Theresa May in London on Monday.

Despite talking up the possibilities of a transitional arrangement in recent months, Britain on Friday said it planned to enshrine its EU leaving date, March 29, 2019 into the Brexit law, which is currently being studied by parliament.

Deal or no deal? Brexit options boiled down

Hard or soft options

It's essentially a choice of a harder or softer Brexit. Harder prioritizes border control over trade. UK firms would pay tariffs to do business in the EU, and vice versa. The softest Brexit would see access to the single market, or at least a customs union, maintained. That would require concessions — including the payment of a hefty "divorce bill" — to which the UK has provisionally agreed.

Deal or no deal? Brexit options boiled down

A leap into the unknown

Businesses have expressed concern about a "cliff edge" scenario, where Britain leaves the EU with no deal. Even if an agreement is reached at the EU bloc level, the worry is that it could be rejected at the last minute. Each of the 27 remaining countries must ratify the arrangements, and any might reject them. That could mean chaos for businesses and individuals.

Deal or no deal? Brexit options boiled down

No deal - better than a bad deal?

If there is no agreement at all, a fully sovereign UK would be free to strike new trade deals and need not make concessions on the rights of EU citizens living in the UK or pay the financial settlement of outstanding liabilities. However, trade would be crippled. UK citizens in other parts of the EU would be at the mercy of host governments. There would also be a hard EU-UK border in Ireland.

Deal or no deal? Brexit options boiled down

Divorce-only deal

The EU and the UK could reach a deal on Britain's exiting the bloc without an agreement on future relations. This scenario would still be a very hard Brexit, but would at least demonstrate a degree of mutual understanding. Trade agreements would be conducted, on an interim basis, on World Trade Organization rules.

Deal or no deal? Brexit options boiled down

Limited arrangement, like with Canada

Most trade tariffs on exported goods are lifted, except for "sensitive" food items like eggs and poultry. However, exporters would have to show their products are genuinely "made in Britain" so the UK does not become a "back door" for global goods to enter the EU. Services could be hit more. The City of London would lose access to the passporting system its lucrative financial business relies on.

Deal or no deal? Brexit options boiled down

Bespoke deal: Swiss model

Under the Swiss model, the UK would have single market access for goods and services while retaining most aspects of national sovereignty. Switzerland, unlike other members of the European Free Trade Area (EFTA), did not join the European Economic Area (EEA) and was not automatically obliged to adopt freedom of movement. Under a bilateral deal, it agreed to do so but is still dragging its feet.

Deal or no deal? Brexit options boiled down

The Norway way

As part of the European Economic Area, Norway has accepted freedom of movement – something that no Brexit-supporting UK government would be likely to do. Norway still has to obey many EU rules and is obliged to make a financial contribution to the bloc while having no voting rights. Some see this as the worst of both worlds.

Deal or no deal? Brexit options boiled down

A Turkey-style customs union

Turkey is the only major country to have a customs union with the EU, as part of a bilateral agreement. Under such an arrangement, the UK would not be allowed to negotiate trade deals outside the EU, instead having the bloc negotiate on its behalf. Many Brexiteers would be unwilling to accept this. It would, however, help minimize disruption at ports and, crucially, at the Irish border.

Deal or no deal? Brexit options boiled down

No deal, no Brexit?

EU President Donald Tusk says the outcome of the talks depends on Britain, citing a good deal, bad deal or "no Brexit" as possible options. However, with both of the UK's major political parties – the Conservatives and Labour – committed to going ahead with Brexit, that looks unlikely.

mm/hg (Reuters, dpa)