Greece: We’ll need EU aid for no-deal Brexit

GREECE has warned it will need more financial aid from Brussels in the event of a no-deal Brexit.

In a move that hands potential leverage to British negotiators, Athens has warned that the financial fallout from such a scenario would leave Greece facing “increased financial and political instability”.

The warnings come from a Greek government working paper, which points to the potential backlash caused by the resulting £10 billion-a-year black hole in EU finances.

Dominic Raab, the Brexit Secretary, warned last month that the £40billion “Brexit bill” will not be paid out if the European Union fails to agree a trade deal with Britain.

The EU’S budget commissioner has warned that Europe will need to find an extra £20billion a year after Brexit if it wants to plug the gap left by the ending of UK financial contributions and to invest in ambitious new plans for defence and border protection.

Although Brussels remains adamant it is prepared for a no-deal Brexit, the Greek warnings point to the pressures poorer member states could face.

“This definitely plays into the UK’S hands as if there is no withdrawal agreement, there will be no financial settlement, which means the EU doesn’t get its money,” said Pieter Cleppe, the Brussels chief of the Open Europe think tank.

“The EU is actually facing two holes in their budget: the hole created by no future UK payments, and also the hole of promises made to increase spending in policy areas.

“The EU has so far only proposed modest spending cuts, so there are big divisions that are likely to escalate in a major row in the future.”

Greece’s plea for special treatment comes after it was forced to accept brutal austerity measures from the EU in the wake of the debt crisis.

Though the European Commission gave the green light for the austerity measures to end this summer, Athens now fears Brexit could plunge the country back into economic turmoil.

However, the EU has insisted that it will not bow to pressure to permit any deal that would undermine the bloc’s rules and regulations.

“The EU27 believe that the costs of conceding to the UK and giving it a sweetheart deal would be of greater danger to the single market and to the European project than the gap in the EU budget itself,” said Agata Gostynska-jakubowska, a senior fellow at the European Centre for Reform.