The UK’s withdrawal from the European Union will be expensive for Britain, Austrian Chancellor Christian Kern said, adding further pressure on the UK government as Theresa May gears up for Brexit negotiations.
“It’s for sure going to be costly,” Kern said in a Bloomberg Television interview in Vienna yesterday. “There are a lot of financial obligations.”
Kern’s remarks follow European Commission President Jean-Claude Juncker’s assertion this week that the UK will have to foot a “hefty bill.” With estimates running at about €60bn ($63bn), UK Trade Secretary Liam Fox has called the idea “absurd” and the government in London is adamant it won’t pay for any EU projects signed after November.
Neither side has officially put a figure on what the final sum might be. It’s not strictly a charge for leaving since the bill comprises various financial commitments made during the UK’s membership, such as pension obligations to EU officials and past pledges to the bloc’s budget and projects.
The so-called divorce bill is one part of the negotiations between the UK and the EU that will start once the prime minister invokes Article 50 of the Lisbon Treaty, which she’s said she’ll do by the end of March.
The talks will be lengthy and “are not going to be that easy; not as easy as the British expect,” Kern said. The EU shouldn’t punish the British, he said, “but for sure a member of the European Union has to be better off than a non-member.”
The British government has hinted that if it gets a bad deal out of Brexit, it could slash Corp taxes to undercut the EU and lure companies to the UK.
That threat is a “concern,” said Kern, who added that irrespective of Brexit there needs to be a wider debate about tax rates in the EU to increase revenue from big companies.
“Big companies like Google, or if you just take Starbucks, are making good profits, good revenues here in Austria, and they are paying really pocket money taxes,” Kern said. “If you look around here in Vienna every single sausage store or coffee house pays more taxes than Google and people in Austria don’t accept it, and for good reasons.”
Kern, a 51-year-old former railroad chief, became chancellor in May, as his Social Democrats haemorrhaged support to the nationalist Freedom Party under his predecessor, Werner Faymann.
Since taking office, Kern has inched the government closer to many of the strict law-and-order positions held by the Freedom Party. Austria instituted tighter border security, limited how many refugees it would accept and is implementing more invasive surveillance measures.
Austria is giving incentives to companies that award jobs to people already in the country in an attempt to lower the jobless rate, Kern said. But the policy isn’t designed to stop people who are legally entitled to work in Austria from coming to the country, he said.
“Unemployment is our biggest challenge and if we are not fighting consequently unemployment, then this will only support right-wing populist parties,” he said. “In relative terms we have received the most migrants in Europe and we are particularly proud of that.”
Kern said his policies are aimed at lowering support for nationalist politicians and “the people who share the ideas of Trump.”
While he doesn’t share President Donald Trump’s policies on migration, the new White House incumbent must be judged on his actions, Kern said. “What he’s done with the Muslim ban was not a brilliant idea, honestly speaking, to say the least, because we need these countries as allies,” he said.
As the EU prepares for one of the most challenging years in its history, with negotiations on Brexit, questions posed by the new US administration and elections in the euro-area’s two largest economies, Kern said it wasn’t the time to doubt the bloc’s future.
“We’re talking about the biggest and most dynamic economic bloc in the world,” Kern said. “We have good reasons for being self-confident.”




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