The Potential Impact of Ukrainian Accession on the EU’s Budget – and the Importance of Control Valves

Summary:

Ukraine’s impact on the budget of the European Union (EU) will be an important part of this debate, for which the present paper makes a first quantified assessment, drawing on the cases of Poland and Romania as comparators. The costs will be significant for sure, but alarmist talk sometimes heard, that all member states will become net payers into the budget, is totally unfounded. There are control mechanisms capping both cohesion and agricultural expenditures.

Even with an optimistic assumption of accession in 2030, the full impact will not be felt until the 2040s, given the long transition periods for phasing in agricultural expenditures. By this time, many things will have changed, including catch-up towards the average EU income level by member states acceding since 2004, creating budgetary space for new and poorer member states.

Of course, there remain big uncertainties over how the war in Ukraine will end and how reconstruction will be funded beyond the major commitments being proposed for the EU – i.e., from other G7 donors, the international financial institutions, and possibly Russia’s frozen assets. However, overall, the budgetary dimension to Ukraine’s possible accession looks relatively manageable.

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