Ireland could lose out as France lays claim to most of €5bn Brexit compensation fund

A €5 billion Brexit compensation fund Ireland hoped would cushion the economic blow of Britain's exit from the European Union is the subject of fierce rivalry between member states with France eyeing much of the pot as compensation for its fishermen.

The Brexit Adjustment Reserve was agreed in a landmark EU budget deal this summer to help the countries hardest hit by Brexit, and with Ireland’s growth forecast to be the worst affected in the bloc, the government hoped to get the lion’s share. But as negotiations enter their final stretch it has become clear that fishing communities in several member states are likely to lose out whether a deal is struck or not, leading to fierce competition over how the €5 billion will be divided.

“Certain member states began to see this whole fund as a sort of fish compensation fund,” an EU diplomat said. “Almost exclusively for fish, and almost exclusively for France”.

With French president Emmanuel Macron gearing up for a re-election campaign against far-right rival eurosceptic Marine Le Pen, the possibility of French fishing communities losing access to their traditional grounds has become deeply politically sensitive, leading Paris to make a bid for much of the cash to soften the Brexit blow.

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As the commission prepares to draw up proposals on how the fund should be divided and what criteria should be used to calculate the impact of Brexit, there has been fierce lobbying by member states to tip the calculation in their favour.

“Lots of countries are eyeing up that fund,” a senior EU Commission official said. “France are looking to dip into the fund. It will be a lively debate between member states and the commission.”

Opposed to the fund

Several countries are opposed to the fund being used for political reasons, to help President Macron quell the domestic blowback of a compromise on fish.

“This instrument is obviously there to be some kind of compensation for the countries that are most impacted and the best way of doing that is concrete data,” a second diplomat said.

The details of any eventual deal will have an influence on how the fund would be divided, because the economic pain is likely to fall unevenly on different member states and industries depending on the trade-offs involved. If no deal can be reached, the impact is expected to be more severe across the board.

Ireland has been pushing along with Belgium and Denmark for broad rules on how the money can be used, to allow the government to use it to support sectors across the economy including agrifood, retail, manufacturing, and fisheries.

The countries geographically closest to Britain and with the strongest trade links are forecast to be hardest hit overall, with Ireland expected to be worst affected followed by the Netherlands and Belgium.

Coastal states

When it comes to fishing, the coastal states of Belgium, Denmark, France, Germany, Ireland, the Netherlands, Spain and Sweden are all at risk of losing access to stocks they previously fished, depending on the outcome of the talks.

The commission official described Ireland’s claim to the Brexit fund as “muscular”, while diplomats agree that by any measure Ireland is likely to have ample evidence that it merits a generous chunk. But the strong competition risks reducing the share.

“The French have their eye on it, and the fund isn’t that big,” a third EU diplomat said.

The announcement of the Brexit Adjustment Reserve was key to Ireland's support of the EU's €1.8 trillion budget and recovery fund deal this summer, to which Ireland is a net contributor. The overall package is yet to receive its final approval, due to a last-minute veto by Hungary and Poland that has sparked intense negotiations to break the deadlock.