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EU auditors warn of risks of spending Brexit reserve funding

The European Court of Auditors raised concerns Monday over proposal for reserve funds related to the Brexit deal praised by British Prime Minister Boris Johnson (shown). File Photo by Hugo Philpott/UPI
The European Court of Auditors raised concerns Monday over proposal for reserve funds related to the Brexit deal praised by British Prime Minister Boris Johnson (shown). File Photo by Hugo Philpott/UPI | License Photo

March 1 (UPI) -- The European Court of Auditors warned Monday of risks related to 5 billion euros in reserve funding allocated to member states to mitigate the negative economic impact of Brexit.

The warning came in an opinion the ECA published Monday on recent Brexit Adjustment Reserve proposal related to the trade agreement based on Britain's withdrawal from the European Union. The ECA warned of uncertainty and risk related to spending on measures that may not be eligible for reimbursement or may not achieve their intended objective.

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British lawmakers passed the Brexit trade deal in December, with the country's Prime Minister Boris Johnson saying it will usher in a "fantastic new relationship," with the bloc.

The European Commission proposed at the time that the BAR be used to support areas "most severely affected" by Brexit through two rounds of allocations totally 5 billion euros.

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The first allocation this year would consist of 4 billion euros in pre-financing, with Ireland, Netherlands, and Germany receiving some of the largest allocations based on trade and fish caught in Britain's exclusive economic zone, the proposal shows.

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Member states would have until Sept. 30, 2023 to apply for a contribution from the second allocation based on any expenditures exceeding the pre-financing amount.

"The BAR is an important funding initiative which aims to help mitigate the negative impact of Brexit on the EU member states' economies," European Court of Auditors member Tony Murphy said in a statement. "We consider that the flexibility provided by the BAR should not create uncertainty for member states."

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The ECA said flexibility can help governments "react quickly to changing circumstances and counter the negative effects of Brexit more effectively," but voiced concern that it was too broad.

"The flexibility provided by the BAR -- in particular the absence of a requirement for member states to officially inform the commission which regions, areas and sectors may be most affected and describe which measures will be funded prior to the allocation of pre-financing -- creates a number of risks associated with the lack of certainty," the ECA wrote.

"The BAR might be used to support measures that are not eligible, so that the commission would not subsequently reimburse costs to member states."

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