EU chief proposes $5.7 billion Brexit emergency fund

EU Council president Charles Michel has proposed setting up a $5.7 billion reserve fund for any unforeseen consequences of Brexit on bloc member states.

"Brexit is challenging for all of us and that is why we propose a Brexit reserve of five billion euros ($5.7 billion)," Michel said on Friday as he unveiled his latest proposal for a long-term EU budget that will be debated by bloc leaders next week.

Brexit with or without an agreement on future ties "will have consequences in Europe for the member states and that's why I think it's ... necessary to ask the commission to prepare for a needs assessment by November 2021", he said.

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Negotiations continue

The EU and Britain are currently in negotiations to agree on a basis of trade relations after a post-Brexit transition phase ends on December 31.

"We all know that the ongoing negotiations are not easy," said Michel, who chairs EU leaders summit meetings.

"And we know that probably by the end of the summer or in September, October, we will have a clearer vision about where we are in these negotiations process."

Ireland is expected to be the most affected by the end of Britain’s membership of the EU, with Belgium and northern France also seen as vulnerable to potential economic shocks.

The EU said on Thursday said it is planning emergency measures across dozens of sectors after the Brexit transition period and warned of "inevitable disruptions" even if a deal is agreed with London.

"There will be far-reaching and automatic changes and consequences for citizens, consumers, businesses, public administrations, investors, students and researchers," the commission warned, urging EU governments to prepare.

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'Frugal Four'

With pressure mounting to reach an agreement on a post-coronavirus economic recovery plan, Michel tried to win over the so-called group of "Frugal Four" member countries with new proposals.

Charles Michel’s latest offers keep the size of the recovery fund, which is meant to help EU countries weather the shock of the economic crisis, at $850 billion (750 billion euros).

But to win broad support for the package, he offered some countries financial incentives on their contributions to the wider EU budget, which pools money by the bloc's 27 countries to spend on common goals like development, fighting climate change and supporting key industries like agriculture.

Speaking during a news conference on Friday, a week before EU leaders meet physically in Brussels in a bid to secure a deal on the recovery fund and the budget, Michel proposed an adjusted budget for the 2021-2027 period amounting to 1.074 trillion euros.