Brexit Adjustment Reserve: cities and regions must be put at the centre of the new instrument

24 March 2021
Brexit Adjustment Reserve: cities and regions must be put at the centre of the new instrument

On 1 January 2021, the United Kingdom officially completed the process of withdrawing from the European Union. Naturally, this put an end to the free movement of people, goods, services and capital between the UK and the EU. As a consequence, we are now seeing the re-erection of barriers to trade in goods and services, and in cross-border mobility and exchanges. In this regard, there have been serious concerns for cities and regions on both sides of the Channel, as they will inevitably suffer the consequences of Brexit and this is already the case for many. Local and regional authorities did not wait for Brexit to happen before anticipating its consequences, but they need further support.

The European Commission has tried to address these issues by proposing – on Christmas Eve 2020 – the creation of the Brexit Adjustment Reserve (BAR). This new financial instrument is meant to help mitigating the impact of Brexit on economic, social and territorial cohesion, softening the disruption generated by the UK's  withdrawal from the European Union.
The Reserve can support measures such as:

  • support for economic sectors, businesses and local communities, including those dependent on fishing activities in UK waters;
  • support for employment, including through short-time work schemes, re-skilling and training;
  • ensuring the functioning of border, customs, sanitary, phytosanitary and security controls, fisheries control, and certification and authorisation systems for products, and communicatin with, informing and raising awareness among citizens and businesses.

For obvious reasons, the sector that has been hit hardest is the fisheries sector. However, industrial value chains, tourism and cross-border cooperation have also been severely affected by Brexit.
One fundamental issue is that the coastal countries have now become an external border of the European Union. Therefore, to ensure that these external borders function properly, these States are investing in their ports. 

The financial instrument amounts to EUR 5 billion and would be made available in two tranches: EUR 4 billion in 2021 and EUR 1 billion in 2024. According to the European Commission’s proposal, the biggest beneficiaries of the reserve would be Belgium, Denmark, Germany, Ireland, France and the Netherlands. These six Member States would receive, altogether, nearly EUR 3 billion out of the EUR 4 billion allocated in 2021 in the form of pre-financing. However, this national-level funding does not entirely reflect the differentiated impact of Brexit at regional level.

As the situation directly impacts the local and regional levels, the European Committee of the Regions has been active since the very beginning: firstly, by establishing a contact group for relations with representatives of UK local governments, to ensure that political dialogue with these representatives continued after Brexit, and secondly, by issuing an opinion on the Brexit Adjustment Reserve, which was adopted at the March plenary session.

We, the PES Group, are very much at the forefront of this issue, as our member Loïg Chesnais-Girard, President of the Brittany region, France, chairs the Committee of the Regions-UK Contact Group, and is also the rapporteur for opinion on the Brexit Adjustment Reserve.

The Committee stresses the urgency for local and regional representatives to be involved in designing and managing the processes of the new Brexit Adjustment Reserve. The Committee welcomes the establishment of this reserve as a tangible expression of intra-European solidarity, but the rapporteur underlines that this “reserve will also need to be regionally targeted to be truly effective. Its regional redesigning is essential because this is not only about repairing Brexit damages, but about supporting conversion and shaping new opportunities, notably through vocational training”.

Moreover, there is a concern that these funds might be too little, too late, as  Loïg Chesnais-Girard argues: “It is time for the European Union to show, and quickly, that it is ready to protect its citizens and regions. But I am afraid that the amount of EUR 5 billion decided at European level will be insufficient”. 

Finally, the opinion also advocates:

  • permitting temporary flexibilities in the area of State aid, taking into account the exceptional nature of the situation;
  • ensuring that technical assistance continues to be eligible for funding through the Reserve;
  • extending the scope of eligible measures to disruptions in cross-border cooperation programmes;
  • basing the allocation criteria for compensation for the fisheries sector on regional data instead of national data.

In order for the Reserve's funds to be available already in 2021, the European Parliament and the Council need to adopt the proposed Regulation by the summer. The PES Group in the European Committee of the Regions is therefore fully committed to ensuring that as many of its positions as possibile are taken up in the next steps of the legislative procedure, which promises to be quite politically intense.




© Photo by Rocco Dipoppa on Unsplash.