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LN: Czechs to get less money from EU budget due to Brexit

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Prague, June 30 (CTK) – The Czech government expects the sum that the country will receive from the European Union in the financial framework 2014-2020 to decrease by 107 billion crowns due to the British exit of the EU, daily Lidove noviny (LN) writes on Thursday.

Apart from Germany, Britain sends the highest sum to the EU coffers and its contribution represents about 15 percent of the European budget. The Czech Government Office estimated that the subsidies that the country can receive in the present multiannual framework might drop accordingly, from 696 billion to 589 billion crowns, the paper writes.

Nobody can imagine that London will stop sending the money soon after it declares it wants to leave the EU, LN says.

EU clerks are not allowed to officially comment on the budgetary affairs and no change will be made until Britain officially applies for departure from the Union. One of the EU clerks unofficially said no marked decrease in the EU funding is likely to occur within the present budget framework. “Tens of thousands of items are linked to it, governmental as well as local. Any across-the-board cuts would create chaos,” he told the paper.

Czech Chamber of Commerce aide Petr Zahradnik shares the view that the structure of the EU budget will not change in the next three years.

“The problem is that the exit clause of the EU treaty is phrased generally, it does not deal with finances at all. It will therefore be a long legal debate,” Zahradnik told LN about the negotiations between London and Brussels.

Due to Brexit, the Czech Republic will get 40 to 50 billion crowns less in the next financial framework after 2020, said Jiri Pavlicek, head of the eNovation consulting firm dealing with EU funds. “This may of course influence the competitiveness of Czech companies,” he said.

One third of the subsidies that the Czech Republic receives from the EU is paid to poor regions within the cohesion funds, or those regions in which the gross domestic product per capita is lower than 75 percent of the EU average. Moreover, these subsidies are granted only if the whole country is under the level of 90 percent of the European GDP.

When Britain leaves the EU, the average GDP in the Union will decrease, especially because London is very rich. Apart from the northwestern part of the country, or the Karlovy Vary and Usti regions, the Czech Republic may advance into the rich zone and lose the right to most of the subsidies, the paper writes.

But the Czech state secretary for EU affairs, Tomas Prouza, believes that Brexit will have no dramatic impact on the country. “After 2020, our country would get less money even without Brexit because we are getting richer much faster than the EU average,” Prouza said.

It will depend on what year will be chosen for the calculation of how rich individual EU member states and their regions are. The 2014-2020 financial framework is based on the figures from 2009-2011, which is advantageous for the Czech Republic. Only Prague belonged among the rich European regions then, while five other regions would currently move to this category (Central Bohemia, Vysocina, South Moravia, South Bohemia and Plzen), LN writes.

Citing data from Eurostat and the Czech Finance Ministry, the paper says the GDP per capita in Prague and Paris is nearly the same and that of the Central Bohemia Region it is similar to the Cornwall County in England.

In total, the Czech Republic has received 561 billion crowns more from the EU that it paid to the joint budget since its EU entry in 2004, the paper writes.

Last year, Czechs paid 41.9 billion crowns to the EU budget and received 193.7 billion crowns from it, which has been the highest sum so far.

The country annually contributes approximately 40 billion crowns to the EU budget. In 2014 it received 119.8 billion crowns from the European coffers, in 2013 it was 126.4 billion, in 2012 113.0 billion, in 2011 75.1 billion, and in 2010 it was 85.0 billion crowns, LN writes.

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