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UK and financing of EU budget – looking beyond ONS figures

August 2nd, 2013

Once again, outlandish headlines have appeared on how much the UK government contributes to the EU budget sparked by the publication of the UK’s balance of payments figures by the Office of National Statistics.

With such claims as “We bankroll EU to tune of £20bn” (Daily Mail), whilst Express reports “Another 1.4bn reasons for us to leave the EU” – (£1.4bn being the alleged rise in the UK’s net contribution in the twelve months ending 2012), readers could be forgiven for thinking the UK simply pours this money down the drain and gets nothing in return.

Of course, there’s more to this story than a quick glance of the ONS figures might suggest.

The figures bandied about do not provide a complete picture of all the EU funding that comes back to the UK.

The ONS figures usually take account of payments only from the EU budget to the UK central and local government sector. For instance, payments to farmers pass through the Department for Environment, Food and Rural Affairs whilst payments under cohesion funding pass through the Department for Communities and Local Government, so both of those are included.

However, they don’t count payments from the EU budget which go directly to British SMEs, experts, universities, NGOs (eg via EU research and innovation and digital agenda budgets) and payments into public private partnerships (such as the EU innovative medicines initiative or green cars schemes) or payments from the EU education and training budget to schools.

In fact, between 2007-2013 the UK will have received €7.5 billion of EU funding for vital science research (eg £23 million towards the setting up of the National Graphene Institute at the University of Manchester will create hundreds of jobs in the North West and attract top researchers to the UK).

And then there are the less easy to calculate benefits which impact the pockets of every Brit, such as lower mobile charges and cheaper cars, or British companies who have benefitted significantly from building large infrastructure in the EU.

But don’t just take our word for it.

The UK government estimates the Single Market brings in between £30 billion and £90 billion a year into the UK economy.

A study published by the Department for Business and Innovation found:

– around 3.5 million jobs in the UK are linked to the export of goods and services to the EU.

– the Single Market may be responsible for income gains in the UK between 2% and 6%, that is between £1100 and £3300 a year per British household.

The only authoritative source for EU budget figures is the EU Financial Report published by European Commission annually.  Last year it revealed the UK’s net contribution for 2011 was €7.255 billion/£6 billion, representing 0.87% of UK public spending (£689 billion) in 2011 and making the UK only the sixth largest net contributor per capita.

The 2012 Financial Report will be issued in September 2013.

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Please note that all statements in all entries were correct on the date of publication given. However, older archived posts are not systematically updated in the light of later developments, for example changes to EU law.

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