In-work benefits emerge as main stumbling block ahead of Brexit

Council President Donald Tusk published proposals aimed at responding to British renegotiation demands on February 2. Those have been agreed with the UK, and are now the subject of negotiation with the remaining 27 member states. The February 18-19 summit is expected to endorse the package, with possible modifications.

Most member states have no problems with the proposal in general, but many of them express concerns that cuts to the in-work benefits would represent discrimination and a breach to the principle of freedom of movement of workers.

However, none of the countries appears determined to pick a fight, as all seem to agree that keeping the UK in the Union is in the common interest. What could be negotiated is the duration of the limitation, which could last up to four years, and some minor tweeking of the text. The in-work benefits in the UK are quite unique in the EU. In fact, they typically supplement the earnings of low-wage employees.

Another element of the package, that child benefits for migrant workers whose children stay in their home country would be indexed to the level of the member state where the child resides, doesn’t appear to be controversial.

Paris and Berlin are expected to have similar positions at the summit. German Chancellor Angela Merkel and French President François Hollande met on February 7 in Strasbourg to discuss its reparations.

France has had a rather cold reaction to Tusks’s paper submitted to the EU members in preparation of the summit. Beforehand, Hollande had warned he would not support any change in EU treaties nor allow the UK to have his say about the eurozone. Indeed, the package contains no such provisions.

Hollande also warned that there should be no further changes to the deal at the summit itself, which means that the package should be agreed on before leaders arrive in Brussels.

However, France can hardly be the champion of nondiscrimination at a time when the country’s legislators discuss stripping “foreign fighters” of French nationality.

France has also tried to wake up its neighbour about the concrete consequences of a Brexit. Some warned that the Calais Jungle camp might move straight to Dover in case of a Brexit, an idea that was retaken by David Cameron over the weekend.

German Federal Minister of Labour and Social Affairs Andrea Nahles stated that the principles of free movement of workers and non-discrimination are non-negotiable for her country. But she also said that Germany was ready to find a solution to the British issue of benefits for foreign EU citizens. “In our view, there are loopholes when it comes to avoid existing disincentives,” Nahles said.

It is no secret that Italian Prime Minister Matteo Renzi wants the UK to remain in the EU. Rome and London share the same perspectives on the need to change the EU, with the exception of the restrictions affecting the freedom of movement. Renzi is concerned about the negative spillover that such a request might have on the thousands of Italian citizens working in the UK.

According to recent data, there are approximately 200,000 Italians living in Britain, about half of them in London. If, as expected, a Brexit causes the loss of many jobs (the optimists predict one million, the pessimists three), tens of thousands of Italians will return home. Those who remain will have to apply for a residence permit and work permit, and the same will have to be done by 20,000 British citizens living in Italy.

If Britain leaves Europe, Italian businesses established in the UK — from Finmeccanica to Eni, from Merloni to Calzedonia, from Pirelli to Ferrero, from clothing to food, furniture and spots cars – might need to reconsider their trading partnerships, subject to new rules. Apart from trade relations, the UK’s net contribution to the EU is estimated to be around EUR 13.5 bln. In this respect, a Brexit would reduce the EU budget, making it likely Italy will need to pay more. The incongita remains the intense debate that Brexit has fuelled among Eurosceptic parties. The Northern League and Five Star Movement in Italy have been the strongest advocates of a possible imitation of Brexit in Italy. Matteo Salvini, MEP and head of the Northern League, has launched a petition to collect signatures for a similar EU referendum.

So far it seems that the Czech Republic generally supports the Tusk proposals. The main concerns of the government are related to the social welfare cuts. Prague takes the view that there should not be any restrictions on the British labour market and social welfare system, which would discriminate against migrants from certain states, and that the potential changes could have impact only on newcomers, not on workers who are already in Britain.

The proposed “emergency brake” mechanism is acceptable to the Czech Republic. The crucial debate will be on how long the free movement can be reduced under this mechanism.

The countries of the Visegrad group, of which the Czech Republic holds the rotating presidency, will hold a minisummit on February 15 in an effort to coordinate a common position ahead of the EU summit.

Tusk will visit Prague on February 16 to discuss the compromise package with Prime Minister Bohuslav Sobotka.

Referring to the 60,000 Slovak citizens who officially work in the UK, Slovak Prime Minister Robert Fico said he could not agree that they would be affected by the new conditions, which would significantly limit their right to various social benefits.

He made this statement Cameron in London at the February 4.

“We insist that those who work currently there (in the UK) will not be affected,” Fico stated, asking for assurance that the deal would not have a retroactive effect.

Slovak diplomats have maintained that a situation when British and Slovak nationals working behind “desks next to each other” were treated differently, represented a red line.

As far as other areas of reform are concerned, Slovakia after Syria bilateral meeting with donor conference, on