CAP faces €3bn black hole after Brexit

BREXIT will leave an annual €10bn hole in the EU budget, a European Parliament report has found, with cuts of around €3bn a year to the Common Agricultural Policy.

The research, carried out for agriculture MEPs by the Jacques Delors Institute, says the gap will need to be filled by higher contributions, spending cuts, a combination of both, or new EU taxes.

The report says cuts to the CAP could rise beyond €3bn — its estimate of the UK’s net contribution to the CAP budget — “if other EU programmes are prioritised”.

Agriculture minister Michael Creed said “new money” should be raised to meet rising challenges such as migration, security and youth unemployment, and that the CAP budget should not be touched.

“New challenges require new money,” Mr Creed told the Farming Independent. “It is not a reason to raid the budget of the Common Agricultural Policy.”

The Parliament report said a request for new money “disproportionally affects some of the EU’s largest net contributors such as Germany, the Netherlands and Sweden”. They are also three of the countries, along with France, leading the EU’s increasingly hardline stance on the UK’s Brexit bill, and are unlikely to agree to higher budget contributions in future.

Fine Gael MEP and Parliament vice-president Mairead McGuinness said money remained the main sticking point in the Brexit talks, and called out the UK’s attempts “to link its financial commitments” to a future trade deal post-Brexit.

Mr Creed said Ireland and the rest of the EU would soon have to “face up” to the CAP budget hole. “It’s entirely understandable that no state is running around now with its hand up and saying ‘We’ll contribute more or we’ll take less’,” Mr Creed said. “But I think Europe — and indeed Ireland — may, at a later stage, have to face up to the issue of how do we fund the Common Agricultural Policy into the future given the UK’s contribution is gone from it.”

Meanwhile, a new study for the Chatham House think tank found that EU budget pressures from Brexit, migration and security are likely to reduce the CAP budget and “could trigger some policy changes”.

However, the report said there was “no real prospect of substantial reform” of the CAP in the next 10 years and warned of a “risk of a regression away from its current ‘decoupled’ approach towards a more protective and distortive one”.