Germany faces 16 percent EU budget hike

Germany is being threatened with significantly higher contributions to the European Union's budget when Britain completes its departure from the bloc in 2019.

The Funke-Mediengruppe newspapers on Friday cited a report by the European Parliament, suggesting that the Berlin government would suddenly be on the hook for an extra €3.8 billion ($4.2 billion), a rise of 16 percent. In 2016, Germany's net contribution — minus EU monies returned to fund projects in the country — amounted to €15.6 billion.

By comparison, France would face an additional €1.2 billion per annum bill on top of its €5-6-billion net contribution, and Italy would pay an extra €1 billion.

"Brexit does not just increase the financial burden for the EU-27, but also changes the distribution of that burden," the newspaper group cited the report as saying.

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Germany, the Netherlands and Sweden currently benefit from reduced payments due to Britain's EU membership, it said.

Britain is currently the second largest net contributor to the EU after Germany; its departure is expected to leave a €10.2-billion hole in the EU's finances.

EU austerity needed?

The EU study says discussions are underway about whether cuts should be made to the EU budget or whether new revenue sources can be opened up, including taxes.

The budget gap revelations come as British negotiators meet with their EU counterparts in Brussels for the sixth round on Brexit talks, in an attempt to settle the country's financial obligations to the bloc. The EU has set a figure of €60 billion, while British officials have, to date, offered just €23 billion.

On Thursday, the Financial Times cited an anonymous EU diplomat as saying that the UK government had been given a three week deadline to improve its offer.

At stake is Britain's future trade deal with the EU, which Brussels has refused to discuss until the financial settlement has been finalized.

Meanwhile, Germany's largest industry group BDI said on Friday that it would be impossible to reach a comprehensive deal on future economic relations between the EU and Britain within the two-year deadline. In doing so, it added its voice to growing calls for a transitional arrangement where Britain remains in the EU's single market and customs union for a longer period.

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The group last month told German firms in the UK to prepare for the possibility of a so-called hard Brexit, where Britain quits the bloc without a trade deal.

BDI Managing Director Joachim Lang is due to meet British Prime Minister Theresa May in London on Monday.

Despite talking up the possibilities of a transitional arrangement in recent months, Britain on Friday said it planned to enshrine its EU leaving date, March 29, 2019 into the Brexit law, which is currently being studied by parliament.

mm/hg (Reuters, dpa)