In a new year message to clients, Jamie Hambro, chairman of James Hambro & Partners, said Britain’s exit from the EU will leave Europe £9bn (€10.1bn $12.2bn) out of pocket a year – a shortfall that will have to be made up by slashing budgets elsewhere.
He said this dent in its finances could force Europe to seriously cut its two biggest areas of EU expenditure, the Common Agricultural Policy (CAP) and regional aid budgets, which consume nearly a third each of the overall EU budget.
Hambro said: “Britain pays to the EU around £9bn a year after all rebates – around 13.5% of the budget. Its departure will leave a big hole in the finances. The gap has to be filled either through higher national contributions from other countries or spending cuts – mainly to the budgets supporting the most socially deprived parts of Europe and to the CAP, which helps subsidise farmers.”
He added it is unlikely the Germans and French would increase tax for their electorates, or run significant deficits for any length of time, to make up the deficit.
Hambro said this leaves Britain in a much more positive position than many in the country believe.
“While the picture may look quite depressing, whatever the outcome, our departure will force long overdue reforms on mainland Europe and here too, which in the long run will be to both sides’ benefit,” he added.
“When we look back in 10 or 15 years’ time, I believe we will see it as a positive turning point in our political and economic history. Short-term pain for long-term gain. So I remain an optimist.”