EU expansion: How Italy and Spain could lose €18 billion in budget cuts

The European Union’s grand expansion plans could leave a sour taste for some member states including – Italy and Spain – as a new study reveals the staggering cost of welcoming nine new nations into the bloc.

A Bruegel think tank analysis has exposed that current EU heavyweights like Italy and Spain could face eye-watering budget cuts. These countries stand to lose nearly €9 billion each in vital cohesion funds – the lifeline cash that helps less-developed regions level up with their wealthier neighbours.

Who’s winning, who’s losing?

Right now, southern Spain, Italy, Portugal, Greece, and much of Eastern Europe pocket most of the EU’s financial help. But if Albania, Bosnia and Herzegovina, Georgia, Moldova, Montenegro, North Macedonia, Serbia, Turkey, and Ukraine join the club, it’s a whole new ball game.

Bruegel’s report shows that the new kids on the EU block would bring a fresh wave of ‘less developed regions.’ This reshuffle means Italy and Southern Spain will slip into ‘transition regions’ status, which sounds fancy but means fewer euros basically. Portugal isn’t far behind, staring at a €4 billion cut, while Hungary and Romania each brace for €2 billion slashes.

But there’s a surprise in store for Poland. Despite its regions stepping up the development ladder, its funding won’t budge – thanks to a 2.3% GDP cap on most cohesion payments. Who knew Brussels could have a soft spot?

Big costs, bigger benefits?

The overall cost of adding these nine nations? A whopping €26 billion a year for the current 27 members. Yet the EU budget would balloon from €1,211 billion to €1,356 billion – plenty of room for manoeuvre, or so they claim.

But it’s not all doom and gloom. Bruegel predicts that enlargement could turbocharge exports and foreign investments, particularly from Western to Eastern Europe. It’s not the first time the EU expansion game has proven profitable – remember the boom after 2004?

And let’s not forget the labour market boost. With many EU countries desperate for workers, the newcomers could bring a much-needed workforce injection.

Still a long road ahead

Don’t pack your bags for Georgia or Montenegro just yet. Brussels will likely overhaul budget rules before handing out the cash, with a transition period in the pipeline for any new members.

For now, the EU’s candidate queue stretches from Albania to Ukraine, and the stakes couldn’t be higher. With Italy and Spain crying foul and new members eager for their slice of the pie, the big question is: can the EU keep everyone happy? Will it keep expanding? Should it keep expanding?

Stay tuned as this budget battle unfolds – and pray your region doesn’t end up the loser in this high-stakes game of EU roulette.

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