Business

The EU will form a reserve to help victims of Brexit

The European Commission has submitted a proposal for a “Brexit Adjustment Reserve” to help countries and industries that will suffer economic and social losses after the UK leaves the European Union. The reserve will make targeted assistance quick and easy, it will work at first. In the future, the European Union will lay down long-term adjustments in new budgets.

EU leaders agreed to create a reserve in July. Its total budget will be five billion euros. It will support business and employment in the affected industries. This will help regions and local communities, including those dependent on fishing in UK waters. It can also help administrations establish proper border, customs, sanitary and phytosanitary controls, provide the necessary level of basic services to affected citizens and companies.

The Brexit adjustment reserve will cover expenses in any EU country for 30 months. It is split into two rounds.

A substantially large chunk of the €5 billion will go towards pre-financing in 2021. It is calculated based on the expected impact of the end of the transition period on the economy of each EU member. Takes into account the degree of economic integration with the UK, including trade in goods and services and the negative impact on the EU fishing industry.

The smaller tranche is for additional support in 2024 in case actual expenditures exceed the original appropriation. To qualify for aid from the reserve, member states must prove that their claims are directly linked to Brexit.

The proposed rules must be approved by the European Parliament and the EU Council.

In the message of the European Commission, it is noted that even taking into account the new Trade and Cooperation Agreement between the EU and the United Kingdom, with the end of the transition period on January 1, 2021, there will be big changes. Great Britain will withdraw from the EU Single Market and the Customs Union, from all EU programs and international agreements. The free movement of people, goods, services, and capital between it and the EU will stop.

The EU and the UK form two separate markets, two different regulatory spaces. Barriers that have not been there for decades will reappear. They will affect government administrations, businesses, and citizens on both sides.



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