Comment by kukx | Hacker News Reader

Comment by kukx | Hacker News Reader

The European Union is looking for a way to fill the budget hole that will inevitably appear after Brexit. The current EU budget is set for years 2014-2020 and Great Britain is the third largest net contributor to it, behind only Germany and France.

Fixing the budget may get nasty, since the EU countries may have to increase the contributions or slash the expenses or EU bureaucrats may have to accept a decrease in wages. Net contributors like Germany or France will not want to contribute more, since they have their own problems to solve internally and the nationalist parties are on the rise there (Marie Le Pen and Alternative fur Deutschland). If the budget is decreased it will further alienate the East and South European countries. And euro bureaucrats will not simply accept smaller wages.

Also after Brexit the average EU income will decrease so some regions may no longer qualify for subsidies. Slow economic growth, European banks problems, a migration crisis, Germany's wealth dependency on export that is expected to falter, a conflict with Russia, all this won't help in finding a new, acceptable budget.

In the current situation the EU is ready to embrace any solutions that will increase the budget without causing too much friction within the bloc. FTT seems to meet this goal.

The EU budget is relatively small, at €185 billion. UK's net contribution amounts to £8 billion, a bit, but not earth shattering.

This Tax won't apply to all members, just to the ones that opt-in (Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain seem to be interested). And from what I understand, any revenues steaming from the tax would go to national governments and not the EU budget.

> ... not earth shattering

In 2015 the revenue from the UK constituted 15.6% of total EU revenues for that year. It's a significant share.

> ... the tax would go to national governments and not the EU budget.

In 2012 the Commission recommended that two-thirds of the revenues from the FTT should go to the EU budget and the remaining one-third should be retained by the EU Members. It's reasonable to think that at least some portion of this tax will go to the EU budget directly.

Germany doesn't have many internal issues apart from a slow bureaucracy and racism.

The EU certainly has dropped of the radar, even as far as the AfD is concerned and the EU budget isn't really a point of much discussion and has never been one really.

The AfD is also not looking very healthy at the moment. Their actual policies won't win anyone over and their performance in legislature isn't either. Not to mention that they have massive internal issues. They are currently capturing the protest and racist vote but as the other parties adapt and the fantasy they AfD has created comes into contact with reality, they're numbers will crash.

Additionally much of the EU hasn't shown themselves from their best side in the refugee crisis, at least from a German perspective. Germany itself or Schaeuble anyway has also made it a fetish to reduce debt. Any proposals that slashes EU expenses, especially towards Eastern Europe won't get much criticism. Indeed some might very well think that this is a great idea just to remind everyone exactly what the EU has to offer and why Germany has the power it has.

> Germany doesn't have many internal issues ...

It has huge problems with its exports. Roughly half of its GDP comes from export. And since the 2008 financial crisis that hit other exporting countries so hard, Germany only grew its exports. How's that possible? They started to export more to the UK, Canada and the US. But it seems they are reaching their limit and if the cyclical crisis comes to the US it will really hurt Germany. When half of the country's GDP comes from export, a 10% drop in export leads to 5% drop in GDP.

It also has a banking system, a refugee and rising nationalism problem.

> ... won't get much criticism.

It won't, in Germany. It will in recipients countries.

> ... why Germany has the power it has

Half of Germany's wealth comes from its export. It means it comes from its clients. Germany's economy is dependent on other countries buying their goods. Anything that threatens the free movement of goods is a threat to Germany's well being. Let say, if some country decides to leave the common market and establish trade barriers to protect its national market and then it does well on its own, other countries that currently struggle may follow the suit and protect their producers by blocking German goods. It would be a disaster for Germany.

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