Brexit to blow big hole in EU budget: commissioner

Britain and the EU have made a historic breakthrough on the terms of Brexit (AFP Photo/Daniel LEAL-OLIVAS) (AFP/File)

Brussels (AFP) - The European Union faces a 20-billion-euro hole in its annual budget due to Britain's withdrawal and rising costs in issues such as defence, a commissioner said Wednesday.

EU Budget Commissioner Guenther Oettinger, of Germany, called on the bloc to improve the efficiency of its spending in the wake of Brexit in March 2019.

"We won't have the UK with us any more, but they were net payers despite the Thatcher rebate, so we will have a gap of 10 to 11 billion euros a year," Oettinger told a press conference as he unveiled the commission's proposals for the budget.

Under late British prime minister Margaret Thatcher, Britain secured an annual rebate on its budget contribution worth more than three billion euros.

Oettinger wrote separately in a blog on the proposals that "at the same time we need to finance new tasks such as defence, internal security... The total gap could therefore be up to twice as much."

Twenty billion euros would amount to $22.5-billion. The EU's budget in 2017 was 157.9 billion euros.

The German commissioner said that the EU could, after Britain leaves, save money by eliminating all rebates enjoyed by a number of other countries.

But it would have to take further measures, he said.

"I am ambitious and realistic," he said. "The Brexit gap will be financed by a mix of cuts, shifting expenditure, saving, and some new sources of money."

The commission's proposals suggest in particular that EU countries could save a lot of money by cooperating in key areas, as they aim to do on defence post-Brexit.

But it does not set out detailed plans, saying that it wants to hear from member state next.

As part of Brexit negotiations that began this month, the EU 27 are demanding that Britain pay an exit bill of up to 100 billion euros to honour commitments made while it was a member.