They’re the plucky four countries standing in the way of the EU’s dream of a bigger and better joint budget after Brexit.

Austria, the Netherlands, Denmark and Sweden — Europe’s “frugal four”— are digging their heels in as Brussels braces itself for its bloodiest ever round of budget talks. A notable omission in the front against EU largesse is Germany. Berlin — the biggest contributor to Europe’s common pot — is notionally committed to coughing up more cash for the EU budget in its preliminary coalition agreement. 

If anything, the absence of German heft and the UK’s traditional resistance to more EU payments could mean the gang of four are even more stubborn this time round. This band of rich, small, northern European nations — all net payers — want to protect their taxpayers from footing the bill for the European Commission's wish to at least maintain the EU’s fiscal firepower when the bloc is down to 27.

Here are the four things the quartet are likely to fight tooth and nail for in the next multi-annual financial framework (MFF):

  1. Shrink the pot:
    The EU is getting smaller after Brexit and the thrifty four capitals think the budget should shrink with it. They want to freeze the current 1 per cent of gross national income that member states chip into EU coffers for the next spending plan covering 2021-2027. The Commission, backed by Ireland, the Baltics, Italy and Poland, are in favour of more, with a minimum starting point of 1.15 per cent of GNI. But Sweden’s finance minister is blunt: After Brexit “there is no hole to fill”, Magdalena Andersson told the FT.

  2. Priorities 
    “Modernisation” is the buzzword all EU governments are paying lip service to for the next MFF. But the thrifty camp have more specific demands. The Dutch, for example, want richer countries to get less of the structural funding used to help catch-up development in the poorer parts of Europe. Austria is also coming round to the idea. The gang of four also want more cash diverted to areas such as investment and technology spending rather than old sacred cows such as farmer subsidies under the common agricultural policy.

  3. Where to find the money: 
    The frugal four don't want to pay more and don’t want Brussels to boost its own cash raising measures either. These “own resources” would allow the commission to tap new sources of revenue to plug the Brexit gap of nearly €12bn a year. Brussels is eyeing EU corporate tax receipts, fees from Europe’s carbon emissions trading scheme, and even the profits of the European Central Bank to bolster its own spending power. But the intransigent four aren’t having it. They see own resources as a crafty way to rob national treasuries of money that is rightfully theirs. “It’s just a plain no”, says Denmark's finance minister Kristian Jensen. 

  4. Rebates: 
    So what’s the end game? Like the British budget battles of yesteryear, it could well end in a rebate. The Dutch, Austrians, Danes, and Swedes all get some money back from the budget. Some of this is a rebate on the mother of all rebates — the UK’s secured by Margaret Thatcher in 1984. For the commission and others like France, these “corrections” as they’re known in EU jargon, will all disappear with the Brits in 2020. But some creative thinking — and accounting — may have to be on the cards to win over the frugal four. As the Netherlands finance minister warns, his country is deadly “serious” about it all. “We are not just exaggerating for the sake of the negotiations”. 

Chart du jour: Latvia asks for help

It’s been a week of turmoil for Latvia’s financial system and one of the banks involved in a money laundering scandal has requested the help of the ECB for emergency loans. But the government insists the Latvian financial system is stable. Neil Buckley reports from Riga. 

The best of what we’re reading

Brexit forever 
The UK is set to clash heads with the EU over the terms of its Brexit transition after demanding a right to veto laws it doesn’t like while leaving open the possibility of extending the period. A legal paper sent to EU governments intriguingly provides no fixed date for Brexit but the Brits are still insisting there will be an end transition date agreed by an EU summit next month. The Telegraph reports the cabinet did not sign off on the text and saw it 24 hours before it was sent to EU capitals. Thursday’s attention turns to Theresa May’s last ditch cabinet “away day” designed to iron out ministerial differences about the future relationship.

The PM could be facing more bad news. The FT reports Anglo-Dutch giant Unilever is poised to make a decision about whether to move its main base to Rotterdam rather than London:

Although they have not lost all hope of winning the tussle with the Netherlands, one British official briefed on the discussions admitted: “It wouldn’t be a great surprise if it happened.”

A final decision has not been taken, though the issue is expected to be decided at the next scheduled board meeting in the second week of March.

France cracks down on immigration 
Emmanuel Macron has signed off new laws to speed up deportations and ramp up detentions of immigrants and asylum seekers (FT). The leftwing Libération reports on the protesting Parisians mourning the rights of foreigners in France. 

Poland, Hungary . . . and now Romania
Bucharest is becoming the latest front in the EU’s battle with member states over the rule of law. Michael Peel in Bucharest looks at the corruption scandals engulfing the country’s most senior politicians and what the EU can do about it.

Martin Selmayr has a new job 
The Brussels Bubble was treated with a round of early morning navel gazing with the announcement that Jean-Claude Juncker’s chief of staff was being reshuffled to head up the commission’s civil service. Here’s the FT’s 2017 profile of the German lawyer who revels in notoriety. The Times quotes a former UK ambassador calling him a “theologian who regards the British as heretics”. Not everyone in the bubble is happy about Mr Selmayr’s surprise appointment to become secretary-general of the commission. One Dutch MEP calls him “political, controversial and not a bridge builder”. Politico thinks the commission is heading into “unchartered” terrain with an openly political civil servant at its helm.

Auf Wiedersehen, London 
One man that has already Brexited from the UK is Olaf Storbeck, the FT’s new man in Frankfurt, who is saying goodbye to London after 8 years:

There are 8.8m people living in the Greater London area. Back in October 2009, when my wife Katharina and I moved over from Düsseldorf, a city of 600,000 in western Germany, we knew about four of them.


Get alerts on European Union when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article