Brexit is here, now what?


Geopolitical futures looks at what lays ahead from the UK now that Brexit has finally gone through. The EU budget will take a hit since the UK contributed just over 17% of the EU budget.


This week, the United Kingdom departs the European Union. For nearly three years the world has watched London exhaust itself over the political deadlock, delayed departure timelines, referendum propositions, and changes of political leadership. The world is well aware of what Brexit could mean for the U.K. and international markets, yet less has been said about what it will mean for the geopolitics of Europe.

The U.K., the EU’s second-largest economy, will withdraw from the region’s largest economic and political institution. Moments like these in history are bound to carry heavy, lasting geopolitical consequences with them, and this is especially the case in a post-Brexit Europe. As the Union Jack is lowered from flagpoles outside EU buildings this Friday, cracks in the EU’s institutional unity will be exposed, further throwing off the political balance between various regional blocs over matters like the eurozone, migration and regulatory policies, and reactivating the fault lines of one of Europe’s most historical competitions between Germany and France.


Economic Impact and the Regional Divide


When it comes to financial growing pains post-Brexit, the EU won’t go unscathed. While the political distraction of Brexit will fade, the EU will be forced to replace the U.K.’s contributions to its budget and navigate deeper, looming financial questions. Divergences will deepen between net contributors (mostly northern European states) and net recipients (southern and newer EU members to the east) over budget size, regional spending, integration, and of course, the eurozone. Brexit’s greatest economic impact will be on the EU’s inner workings, in the absence of one of the union’s largest budgetary contributors.


One of the largest sources of European tension will feature the EU budget, 11.26 percent of whose contributions in 2018 came from the U.K., the fourth-largest net contributor after France and Germany. Brexit is a large budgetary loss for the EU, an institution that has struggled with increasing financial contributions among newer, eastern European members. To make up for it, the EU has promised to reduce regional spending with the European Regional Development Fund (ERDF) and European Social Fund (ESF), and has pressured its wealthier, northern members to bump up budget contributions each year. (Germany will fill most of the gap, providing the largest share of upward of 33 billion euros by 2027.)