Malta is set to receive €42 million in funds to weather the impact of Britain’s departure from the European Union’s single market and Customs union, according to plans unveiled this week.
The European Commission is proposing that a considerable chunk of the Brexit Adjustment Reserve – worth €5 billion in total – is handed to Ireland (€1 billion), followed by €757 million for The Netherlands, €455 million for Germany and €421 million for France.
Malta’s €42 million allocation is close to Cyprus’ and Hungary’s share of €49 million and €41 million respectively. By comparison, Luxembourg will get €121 million and Italy €87 million.
The division of the funds – €4 billion of which are set to be handed out this year – still needs to be signed off by the member states and the European Parliament.
The remaining €1 billion will be disbursed in 2024, in case the actual expenditure exceeds the initial allocation.
The funds will support businesses and jobs in affected sectors as well as public administrations for the proper functioning of border, customs, sanitary and phytosanitary controls. The reserve fund is meant to lessen the negative impact on economic, social and territorial cohesion, and all member states are eligible for support.
Allocations will support businesses and jobs in affected sectors
The allocations take into account the relative degree of economic integration with the UK, including trade in goods and services, and the negative implications on the EU fisheries sector.
While there is no impact on Malta’s fishing sector, according to data published by the Commission, Malta’s sum of export and import as a percentage of GDP stands at 37.4%, surpassed only by Luxembourg at 48.4%.
In 2016, ratings agency Fitch had warned that Malta would be among the countries that will most suffer the consequences of Brexit.
The agency had said that the most exposed countries would be Ireland, Malta, Belgium, the Netherlands, Cyprus and Luxembourg.
On Thursday, the Office of the Prime Minister said the European Commission-proposed Brexit Adjustment Reserve would allocate additional funds to those agreed to last July under the EU budget and recovery fund.
“Discussions on the allocation of this reserve have just started and have to be scrutinised through all EU institutions,” the OPM said.
Discussions are underway on which sectors in Malta and all other EU Members States will be eligible to receive funds from this reserve.
“Member States are insisting that funds from this reserve should be available in the shortest time possible. The Commission is considering the reserve as a very important tool that will provide financial support to mitigate the repercussions of the withdrawal of the UK from the EU,” the OPM said.