Brexit Fallout Could End Rebates for All EU States, Denmark Says

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The European Union is likely to phase out its current rebate model once Britain, its biggest beneficiary, leaves the bloc, according to the Danish government.

“Once the British EU rebate ends, it’s expected that there’ll be a discussion” of the current model, and that there will be “pressure” on the bloc to “phase out” the system “as we know it today,” the office of Danish Finance Minister Claus Hjort Frederiksen said in an e-mailed response to questions.

The U.K. rebate was secured by then-Prime Minister Margaret Thatcher at a summit in 1984 after she declared: “we are simply asking to have our own money back.”

The existing model used across the bloc is “to a high degree” shaped by Britain’s special demands, the Danish ministry said.

Denmark obtained an annual rebate of 130 million euros ($145 million) in 2013 after making it a condition for backing the bloc’s budget, while Sweden and the Netherlands have also secured cash-back guarantees. Germany also benefits from the system.

For a QuickTake on why Britain voted to leave the EU, click here.

Denmark plans to insist that EU member states not be expected to contribute more to the bloc’s budget once Britain leaves, according to the Finance Ministry in Copenhagen. Contributions shouldn’t rise from the levels agreed in the 2014-2020 EU budget, Denmark will argue.

The average British rebate was 3.9 billion pounds ($5.1 billion) from 2009 to 2015, reducing the country’s average contribution to 8.5 billion pounds, according to the Office for Budget Responsibility. It is set to be about 4.5 billion pounds this year.

The anti-Brexit lobby struggled to highlight the U.K. rebate issue during the referendum campaign, allowing its opponents to successfully argue the EU was a sizable fiscal drag on the U.K.

— With assistance by Simon Kennedy

(Adds Danish view on additional contributions once U.K. leaves.)
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