Guido said in January that world opinion would shift this year from “What the hell have the Brits done?” to “The EU is in trouble without Britain.” Lo and behold the European Commission has today issued a finance paper which faces up to the reality of the EU without its second biggest financier.  The report on “Future Financing of the EU” is from a high-level group set up jointly by the European Parliament, the Council of the EU and the European Commission, chaired by Mario Monti. The literal money quote is:

“The gap in EU finances arising from the United Kingdom’s withdrawal and from the financing needs of new priorities need to be clearly acknowledged.”

Translation: the EU is going to go broke unless they do something big. Some of the ideas the Commission suggests include:

• Common energy or environmental taxes.
• A percentage of the common corporate tax base or the financial transaction tax going to the EU.
• Exploiting the resources of European Central Bank for the EU budget.
• Revenues from auctions under the Emissions Trading System, green taxes for cars
• Visa fees from the European Travel Information and Authorisation System to be paid by tourists entering the EU
• Revenue from the Financial Transaction Tax (FTT) to be paid to the EU

German industry will not be keen on becoming more heavily taxed and less competitive, Ireland will not be happy to raise corporate taxes, funny money ideas will horrify the Bundesbankers in Frankfurt, more green car taxes will infuriate car loving drivers in Northern Europe. The tourist industry in Southern Europe will despair at tourist taxes. The FTT won’t raise much tax because all the trade that can will move to New York, Hong Kong and the financial capital of the world, London. This is a recipe for European decline…

Guido has a radical idea for the EU: do less. They won’t because “more Europe” is always the answer in Brussels…