A recent Bruegel study delves into the potential budget cuts that some EU countries could face if the bloc decides to admit all nine candidate countries. The study suggests that current EU members could face an overall net cost of approximately €26 billion per year if the enlargement were to take place. This potential enlargement would also lead to significant changes in the EU’s budget, particularly in terms of cohesion funds, which are funds allocated to less-developed regions in order to help them catch up with more prosperous ones.
Currently, the majority of less developed regions that receive cohesion funding are located in southern Spain, Italy, Portugal, Greece, and parts of Eastern Europe. However, if new countries were to join the EU, the landscape of these less developed regions would change. Most of the current less developed regions would be reclassified as “transition regions,” resulting in reduced cohesion funding. The study indicates that Italy and Spain would be the most heavily impacted in terms of funding cuts, with each country losing nearly €9 billion, followed by Portugal, Hungary, and Romania. However, Poland, with an existing constraint on cohesion payments, would not face reduced funding.
In the event of an enlargement to 36 states, the total EU budget would rise to €1,356 billion from €1,211 billion. The Bruegel analysis also takes into account potential changes to other parts of the budget, such as the Common Agricultural Policy, Neighbourhood, and Public Administration. The EU is expected to revise its budget rules before any potential enlargement and implement a transition period before new members can access funds. However, despite the potential budgetary challenges that enlargement may bring for existing members, there are also potential benefits to be gained.
Bruegel suggests that a larger EU could potentially boost the economy of existing members, particularly in terms of exports and foreign direct investments. Historical trends show that foreign direct investment flows from Western to Central and Eastern European countries that joined the EU between 2004 and 2013 have been profitable, and this trend could continue with the addition of nine new members. Additionally, new member states could provide additional workforce to EU countries facing labor shortages. While net beneficiary countries may receive slightly less from the EU budget post-enlargement, this reduction is expected to be minimal in comparison to the reduction seen in the current Multiannual Financial Framework.
In conclusion, the potential enlargement of the EU to include nine new member states could bring about significant changes in the bloc’s budget and allocation of funds, with some current EU members facing budget cuts as a result. Despite these challenges, enlargement could also offer benefits to existing members through increased economic activity, exports, foreign direct investments, and access to additional labor. Ultimately, the decision to expand the EU will require careful consideration of both the costs and benefits for all members involved.
