The Brexit adjustment reserve (BAR) fund was put in place as part of the multi-annual financial framework (MFF), the seven-year budget agreed by the EU last July.

It was designed as a fund to help EU countries that are most exposed to trade with the UK to adapt to the new reality of doing business with additional red tape and to ease the impact.

Fishing is recognised as a special case, so part of the fund has to be spent to support that sector.

Calculation

The amount of support made available is calculated using the total of trade, imports and exports between each member state and the UK as a percentage of their GDP (Figure 1).

Ireland is the only EU country to reach this ceiling.

In the case of Ireland, this is €94.24bn trade with the UK, which is 28.7% of the €327.81bn total GDP.

Only Malta, which is a tiny economy long linked to the UK (37%), and Luxembourg, also a small economy at 48%, have a bigger share of their GDP accounted for by trade with the UK (Figure 2).

Using the money

The fund will be used to assist member states for expenditure incurred between July 2020 and December 2022 for Brexit mitigation measures and have until September 2023 to make an application for a contribution.

According to the regulation: “The reserve will be complementary and ensure synergies with other union programmes and funding instruments.”

However, it is clear that the member state government will be using this fund to recoup funding used to offset the impact of Brexit.

Comment

The release of the first tranche from the BAR fund coincided with the conclusion of the EU-UK trade agreement.

It is no coincidence that the term cohesion is mentioned so frequently - this is clearly a political expression of solidarity with member states that will be most affected by Brexit for fishing and wider trade.

In the case of Ireland, the biggest impact of Brexit is on agriculture, the beef sector in particular.

This also represents a huge area of Ireland’s trade in goods with the UK, comparable with pharma.

However, pharma has flexibility to trade in global markets and is therefore less dependent, even though the UK is a big market for the sector.

With the ambition for the fund to work along with other EU programmes, there is definitely potential to link with CAP and Farm to Fork to make a serious attempt to have a real impact on the structure of Irish farming for the decade ahead.