EU could be left with €20bn gap following Brexit

Brexit could lead to a €20bn deficit in the European Union’s annual budget, according to the commissioner in charge of the bloc’s finances.

One of the key details to be thrashed out during the ongoing negotiations between Britain and the EU is a so-called 'Brexit bill', where the former will pay a certain amount of money for relieving its obligations in the bloc.

Writing in a blog post on Wednesday, Günther Oettinger said the financing areas such as defence and security would have to be covered by other means.

Oettinger wrote: "The departure of the United Kingdom alone leaves us with a revenue shortfall of minimum EUR 10 billion a year. At the same time we need to finance new tasks such as defence, internal security... The total gap could therefore be up to twice as much.

"Therefore, though money is not everything, we will need the financial resources to fulfill these new tasks. Or scale down our ambitions."

The UK decided to leave the EU last June in a seismic decision for both sides, with the expected departure date in March 2019.

The Commission said a rebate introduced for the UK during Margaret Thatcher’s time as PM would now become obsolete, along with similar rebates given to the likes of Germany and the Netherlands.

"With the departure of the United Kingdom, the rebate that was introduced as a concession to that country in the past will become obsolete,” a paper from the Commission said.

"The same is true for the rebates on the UK rebate. The other rebates will expire at the end of 2020. The elimination of rebates would open the door to substantial simplification of the revenue system."