EU auditors warn over 5 billion euro emergency Brexit spending

BRUSSELS (Reuters) – The European Union lacks tight oversight of 5 billion euros in emergency Brexit aid, the bloc’s auditors said on Monday, warning over governance risks regarding quick cash injections as Brussels prepares to disburse massive amounts of COVID-19-related stimulus.

The European Court of Auditors (ECA) said member states are due to get 4 billion euros, or most of the funding from the so-called Brexit Adjustment Reserve this year, without the usual requirement to agree with the bloc’s executive in advance what exactly they plan to spend it on.

“We therefore raise concerns that this proposed timing and structure creates a lack of certainty where member states may choose suboptimal or ineligible measures,” said Tony Murphy, a member of the ECA, an agency set up to ensure EU funds are spent properly.

Murphy said EU countries would only report on their completed spending in September 2023 and would need to pay back money that would not be deemed eligible.

“We would like to see changes,” to improve financial management and ensure the overall effectiveness of the Brexit emergency fund, Murphy said, though he said the ECA realised those most affected by Brexit needed the money swiftly.

Based on the size of trade ties with now-departed Britain and the share of fish catch in UK waters, Ireland is due to get a quarter of the Brexit emergency allocation, followed by the Netherlands, Germany and France.

As the EU moved from a protracted Brexit crisis to grappling with the coronavirus pandemic, last year it designed another unprecedented spending plan – economic stimulus worth 750 billion euros to pull member states out of a record recession.

While EU countries need to pre-agree with the Brussels-based European Commission their spending plans to receive recovery money, Murphy said trade-offs between swift and diligent spending were on the auditors’ minds.

“What we’d be striving at is a good balance between flexibility and appropriate control structures,” he said. “They are emergency measures, we can’t wait around for years for the plans to be drafted. It’s a matter of getting the balance right.”

(Reporting by Gabriela Baczynska; Editing by Hugh Lawson)