A BIT OF HISTORY

The Brexit Adjustment Reserve (hereinafter “BAR”) was established by the European Commission via Regulation (EU) 2021/1755 of the European Parliament and of the Council.

The European Council, during its extraordinary meeting of 17-20 July 2020, agreed upon the BAR as a special thematic instrument to finance unforeseen expenditure, hence expenditure not included in the Multiannual Financial Framework (MFF).

The BAR is therefore a necessary ad-hoc action based on the provisions laid down in Article 175 TFEU. The BAR was established as a functional instrument to counter the negative economic, social, territorial and environmental consequences of Brexit in the EU Member States, and mitigate the negative impacts on economic, social and territorial cohesion.

With Regulation (EU) 2021/1755, the overall BAR allocation was confirmed at €5 bn, broken down into a pre-financing share of €4 bn and a residual share of €1 bn, respectively. The provisional allocation to Italy amounts to €146,769,412, as set out in the Annex to Decision C(2021)7330 of 08 October 2021.

FIRST SUMMARY OF BREXIT EFFECTS ON ITALY’S ECONOMIC SYSTEM

The exit of the United Kingdom from the European Union (a.k.a. Brexit) has triggered noteworthy effects on the Italian economic market.

Within the EU-UK Trade and Cooperation Agreement signed at the end of December 2020, a number of barriers to trade were introduced (as from 1 January 2021) in relation to the benefits provided by the Single Market.

The increase in customs controls caused a major collapse in European exports, which fell by as much as 40.7% for some crucial trade in the UK economy. Brexit is revolutionising trade and Italy is among the EU countries most affected by this change. As a matter of fact, since the UK left the EU single market and customs union, companies have had to adapt to new measures regulating cross-border trade. Furthermore, customs-related slowdowns, also made exhausting by Covid’s variant alert controls, discouraged several deliveries. The impact is harder on small and medium-sized companies, as they are less prepared to deal with this kind of situation than multinationals, which are instead structured so as to handle exports also outside EU borders.

COUNTER-MEASURES PROPOSED BY THE EUROPEAN COMMISSION

Via Article 5 of the Regulation establishing the BAR, the European Commission suggested a non-exhaustive number of measures that Member States could apply in order to counter Brexit negative consequences. These suggestions will guide the Territorial Cohesion Agency in preparing BAR implementation instruments along with a detailed analysis of Italy’s situation, also through multi-level dialogue with relevant stakeholders. As follows, the measures suggested by the European Commission:

a) Supporting private and public enterprises, primarily SMEs, self-employed workers, local communities and organisations negatively affected by the United Kingdom’s withdrawal from the Union;

b) Supporting those economic sectors most adversely affected by the United Kingdom’s withdrawal from the Union;

c) Supporting businesses and regional and local communities and organisations (including small-scale coastal fisheries) that are dependent on fishing in the UK waters, and/or the waters of special status territories, or waters subject to fisheries agreements with coastal states where fishing opportunities for Union fleets have decreased as a a result of the United Kingdom’s withdrawal from the Union;

d) Supporting job creation and preservation, including green jobs, short-time working schemes, retraining (refresher courses) and training in the sectors hardest hit by the United Kingdom’s withdrawal from the Union;

e) Ensuring the functioning of border, customs, sanitary and phytosanitary, security and fisheries controls, as well as collection of indirect taxes, including additional staff and related training and infrastructure;

f) Promoting certification and authorisation schemes for products; providing assistance in meeting establishment requirements; facilitating labelling and marking (e.g. safety, health and environmental standards); and providing assistance on mutual recognition;

g) Implementing communication, information and public awareness raising actions;

h) Reintegrating EU citizens and persons entitled to reside in the Union who have left the United Kingdom following its withdrawal from the Union.

IMPLEMENTATION PROGRESS

As of November 2021, Italy’s Territorial Cohesion Agency has initiated and concluded most of the administrative preparatory procedures for BAR operational start. As follows, the related chronological list:

• 5 November 2021 – Via DG Decision No. 246/2021, Ms. Teresa Costa, formerly in charge of Office VII (competence centre for coordination and execution of first level controls) of the Programmes and Procedures Area of the Territorial Cohesion Agency, was appointed managing body for BAR financial contribution and the functions and tasks provided for in Article 14(3) and in point 3 of Annex III of Regulation (EU) No. 2021/1755.
• 8 November 2021 – The Director General of DG Regio, Marc Lemaitre, was notified (by Silvia Valli, from the Permanent Representation of Italy to the European Union) of the newly appointed BAR management officer.
• 22 November 2021 – The confirmation of the drafted description of the BAR management and control system and MEF-RGS-IGRUE appointment as independent audit body for the BAR was notified to the European Commission.
• 16 December 2021 – The European Commission transferred the first pre-financing amount, equal to € 45,554,810.
• 7 February 2022 – Approval and publication of the call for selection of 13 experts.  See the selection section.

 

NEXT STEPS

The above managing body, supported by its team of experts, will set up BAR implementation actions by:

• Preparing a strategic-operational plan analysing Brexit consequences in Italy and identifying objectives to counteract its negative effects.
• Identifying support measures aimed at businesses and public administrations hit by Brexit negative consequences.
• Initiating a multi-level dialogue with the stakeholders identified in the above plan.
• Defining, managing and implementing the communication strategy.
• Setting up and managing the financial circuit.
• Preparing management and control acts and tools to create a sound and agile administrative framework for rapid and effective implementation of the Brexit Adjustment Reserve.

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