The EU Parliament’s regional development committee has discussed the details of the EU’s €5,37 billion Brexit Adjustment Reserve, with lawmakers calling for the fund to be implemented as soon as possible. EURACTIV France reports.

The fund, agreed by leaders of the EU27 last summer, is designed to help businesses and communities cope with increased costs of trade and lost income now that the UK is outside the EU’s single market.

During the discussion on Tuesday (16 March) the regional development committee’s rapporteur MEP Pascal Arimont (EPP), said Brexit presented an “economic earthquake”, for which the adjustment reserve, like the recovery fund, had been designed in a spirit of solidarity.

Brexit, which took effect on 1 January, has impacted heavily on a number of European regions, particularly those whose economic activity is strongly linked to fishing.

The economic and trade partnership agreement concluded at the end of December after tough negotiations gives European fishermen access to British waters for a transitional period until 2026.

During this period, the bloc will have to gradually get used to giving up a quarter of its catches, worth about €650 million a year. The Brexit Adjustment Reserve was approved by the European Council at the end of July to cope with such consequences.

A regional rather than a national principle

Presented by the European Commission at the end of December and then to the Parliament’s regional development committee in mid-January, the fund will be made available in two phases, with a pre-financing of €4,24 billion released this year, the remaining part to be paid in 2024.

Ireland will be given the largest share of the pre-financing, €991 million, while France is to receive €366 million.

Arimont called for the measure to be implemented as soon as possible in a quick and efficient manner so that the Portuguese Presidency of the EU Council can endorse it.

This was a view shared by other lawmakers, including shadow rapporteur and Bulgarian MEP Tsvetelina Penkova (S&D). She also called for the reserve to prioritise preserving and creating jobs and to go beyond merely covering Brexit-related administrative costs for public institutions.

Lawmaker Martina Michels (GUE/NGL) meanwhile said that the reserve cannot solve the fact that local and regional perspectives were not sufficiently considered in the EU-UK agreement. However, the text could be amended to ensure that territorial, local and regional authorities, social partners and civil society are more involved and that aid gets to where it is most needed.

MEPs question distribution keys

MEPs have questioned the distribution of funds between sectors, with Arimont saying that the money should not benefit those who have benefited from Brexit. MEP Irene Tolleret (Renew) meanwhile suggested excluding financial services because they had not suffered from Brexit.

Tolleret was also critical of the mechanism to distribute the calculation between EU countries, saying trade volumes should not be divided by GDP as they were not like-for-like economic measures. Instead she proposed dividing trade volumes by the value of the EU internal market.

The Renew MEP also challenged the calculation of dependancy which she considers irrelevant, arguing there is no two-tier fishing, given the common fisheries policy and that a Galician boat should be compensated in the same way as a Danish boat.

Green MEP François Alfonsi agreed that the distribution key is problematic, arguing that a region like Brittany, with a population of around 3.5 million, would receive less EU aid than Luxembourg, which has just over 600,000 inhabitants.

Alfonsi, who is also calling for the GDP-trade value calculation to be refined, said this problem needed to be addressed.

Calls for ‘equitable distribution’

In an opinion piece published on 1 March, the European Court of Auditors also questioned the reserve’s functioning, expressing concerns about its implementation and design. The court said that, in the absence of real knowledge about the extent of Brexit’s impact to date, there was a significant risk of a poor distribution of funds.

In mid-February, a delegation from the Conference of Peripheral Maritime Regions (CPMR) also raised concerns about the fund’s implementation and governance and called on the European Commission to ensure that the funds are distributed fairly across the territory and used in a targeted manner.

The proposed regulation for a Brexit Adjustment Reserve has yet to to be adopted by the EU Parliament and the Council.