Finding the cost of EU membership to the UK is not straightforward. If you Google ‘Cost of EU membership’ you will see many different figures reflecting different methodologies. For example, those keen to leave the EU may include all the gross costs, plus estimated bureaucratic costs and not include any benefits. Those wishing to highlight the benefits of EU, may use different methodologies
The ONS. has produced a useful page, which gives the cost of EU membership, including net flows. These are based on figures from 2014.
In 2014, the UK’s official gross payments to the EU amounted to £19.1 billion, but the UK receives an automatic rebate of £4.4 billion. This means £14.7 billion was transferred from the UK to the EU in official payments.
The UK public sector also receives from the EU:
- European Regional Development Fund – £1.1 billion
- European Agricultural Guarantee Fund – £2.3 billion
This gives an ONS net contribution of £9.9bn
The EU also calculates private sector payments from EU to UK private sector e.g. EU payments to universities for research, e.g. programmes like Horizon 2020 – (approx £1-2bn a year)
Working out an average for 2010-2014, this gives an annual net contribution of £7.1 billion according to European Commission figures.
How significant is EU spending?
- Total UK public sector spending is £798bn in 2014.
- The £7.1bn net contribution works out at 0.9% of public sector spending or £110 per person per year. It is 0.4% of GDP.
Other factors to consider in estimating cost of EU Membership
If the UK leaves the EU, how much would it have to pay for access to the Single Market? For example, Norway and Switzerland pay to have access to the Single Market. According to BBC website:
It says that Norway’s contribution to the EU in 2011 was £106 per capita, compared with the UK’s net contribution of £128 per capita in the same year.
The paper says that Switzerland’s contribution as a member of the European Free Trade Areas (Efta) has been about £53 per head in recent years. (BBC link)
- Another factor is would the UK government replace agricultural subsidies with domestic subsidies or would it take the opportunity to end subsidies to farmers? (unlikely I would imagine)
- Rules and regulations. Many claim that the EU has too many rules, regulations and bureaucracy. If the UK left the EU, we could save on lower levels of bureaucracy. However, to trade with Europe, we may need to maintain, at least some of these regulations.
- Benefits of Single market. If we start adding costs of bureaucracy, you could make a case to start including benefits which flow from access to single market – inward investments, greater trade, cheaper imports. This becomes very difficult to calculate.
EU cost £350m a week – Vote Leave
Vote Leave argue the EU costs the UK £350m a week. How did they arrive at that figure?
They used the gross figure of £17.8bn, or £342m per week. This figure ignores the rebate of £4.4bn which is automatically deducted. It also ignores other flows from EU to UK. (e.g. agricultural subsidies, regional funds, private investment).
The figure of £350m a week is misleading in the sense, the UK is not sending £17.8bn to the EU. Also, the net contribution is a better guide to cost. For this you can take ONS net contribution of £9.9bn or The EC of £7.1bn which includes flows to private sector.
Changing cost of EU Membership
The cost of EU membership is based on three factors
- A fixed percentage of gross national income (GNI)
- Customs duties collected on behalf of the EU
- A percentage of VAT income.
Further links to stats
Related posts on EU