Council adopts a €5 billion Brexit adjustment reserve to tackle the negative impact of Brexit

The Council today (28 September 2021) gave its final approval to a fund designed to help member states tackle the negative impact of Brexit.

The fund of five billion euros (in 2018 prices) will support the hardest hit regions, sectors and communities to cover extra costs, compensate losses or counter other adverse economic and social effects resulting directly from the United Kingdom’s withdrawal from the European Union.

Unprecedented situation

It will support public and private businesses facing disruption of trade flows, including new costs for custom checks and administrative procedures. Since the UK’s withdrawal from the EU has created an unprecedented situation, member states will have the flexibility to decide on the best actions to take so as to counter various negative consequences.

In this respect, the setting up of the fund provides for a non-exhaustive list of eligible measures, ranging from support for SMEs, regional and local communities and organisations, including small-scale coastal fisheries dependent on fishing activities in UK waters, as well as measures to support job creation and reintegration in the labour market of returning EU citizens.

The reserve will finance measures introduced from 1 January 2020 until 31 December 2023 to cover expenditure incurred before the expiry of the transition period.

Allocation

The Council has decided to provisionally share upfront all the resources of the reserve, which in current prices stand at €5.4 billion, taking into account the adverse impact of Brexit on each member state. The method for calculating the provisional allocation is determined by three main factors.

The largest amount of €4.5 billion is shared according to the importance of trade with the UK, €656 million are shared based on the importance of fisheries in the UK’s exclusive economic zone, and €273 million are distributed based on the importance of neighbouring links for the maritime border regions with the UK.

In addition, to allow member states to take rapid action, by far the larger part of the resources, €4.3 billion, will be made available as pre-financing in three annual tranches – in 2021, 2022 and 2023. The remaining resources will be made available in 2025, after a review of the expenditure on eligible measures in the previous years, which will also factor in any unused amounts.

Next steps

Today’s approval by the Council of the European Parliament’s position at first reading, which was voted in plenary on 15 September, is the final legislative step and means that the Brexit adjustment reserve has been adopted. The regulation will enter into force on the day after its publication in the Official Journal of the European Union in the first half of October.