UK contribution for 2019
.The UK gross contribution to the EU budget in 2019 was £18.9 billion (according to HM Treasury, see Tables 3.1 and 3.2). The UK’s rebate reduced this to £14.4 billion (£277 million/week), which was the amount sent to the EU (including duties UK collected on behalf of EU). Against this, the UK benefited from receipts from the EU of £5.0 billion through payments to the UK public sector (the majority related to the Common Agricultural Policy). The UK net contribution was £9.4 billion in 2019.
In addition, UK organisations received funds won through competitions, for example, for research in universities. The House of Commons Library estimated that between 2014 and 2018 these additional receipts were between £1.0 billion and £2.0 billion each year.
Assuming mid-point receipts of a further £1.5 billion for 2019, results in a UK net contribution of £7.9 billion or £152 million per week or 32p per day per person (UK population of 66.9 million in 2019 – estimated by ONS – and 66.4 million in 2018).
From 2021, as a non-EU member, the UK makes contributions to the EU for its ongoing participation in EU programmes, such as Horizon, where these have been agreed post Brexit.
| Table 3.1: UK contributions to the EU (UK financial years) | 2019 Annual £bn | 2019 Per week £m | 2019 Per person per day (p) | 2018 Annual £bn | 2018 Per week £m | 2018 Per person per day (p) |
|---|---|---|---|---|---|---|
| UK contribution | 18.9 | 363 | 78 | 17.8 | 342 | 72 |
| Less: rebate | (4.5) | (4.3) | ||||
| Gross contribution to EU budget | 14.4 | 277 | 59 | 13.4 | 258 | 55 |
| Less: public sector receipts | (5.0) | (4.4) | ||||
| Net contribution to EU budget | 9.4 | 181 | 39 | 9.1 | 175 | 37 |
| Received by UK organisations through competitions | (1.5) | (1.5) | ||||
| Net UK contribution | 7.9 | 152 | 32 | 7.6 | 146 | 31 |
Source: House of Commons Library, The UK’s contribution to the EU budget, 4 January 2021
Table 3.2 from the House of Commons Library breaks down the components of UK contributions from 2016 to 2020. Note that the net contribution excludes funds received through competitions for funds mentioned above.
Note also that the UK’s contribution included its share of the EU international aid budget which was about £1 billion in 2015/16. As the UK was likely to continue to spend this outside the EU, it was unlikely to be ‘saved’.
Table 3.2: UK contributions and public sector receipts, 2016 to 2020 (£ million)
Source: House of Commons Library, The UK’s contribution to the EU budget, 14 June 2022
UK contribution and public expenditure
The UK’s net public sector contribution to the EU of £9.4 billion in 2019 represented less than 1.2% of UK public expenditure of £802 billion for 2018 -19 (Figure 3.4). This meant that, even as an EU member, 98.8% of UK public expenditure was under direct UK government control.
Figure 3.4: UK public sector spending 2018 -19 (£bn)
Source: HMT, Public Spending Statistics, July 2019
ONS criticism of Vote Leave
The Office for National Statistics (ONS) criticised the Vote Leave campaign in April 2016 for using the ‘potentially misleading’ figure of £350 million per week:
“the £350 million figure, which was a gross figure and did not take into account the rebate or other flows from the EU to the UK public sector (or flows to non-public sector bodies), alongside the suggestion that this could be spent elsewhere, without further explanation, was potentially misleading.”
However, Vote Leave campaign material continued to use similar statements.
There was a bigger criticism that the ONS and most media missed. Although leaving the EU theoretically improved the UK’s public finances by saving the UK’s net contribution, it was just part of the story. As all reputable economists agreed, EU membership increased UK national income by much more than the net contribution. Therefore, leaving the EU meant a net cost – the ‘saving’ was illusory.
Photo by Jakub Junek/Shutterstock
Economic benefits of EU membership
In August 2016, the Institute for Fiscal Studies (IFS) reviewed several reputable economic studies of the costs and benefits of different options for UK’s relationship with the EU. The IFS concluded that membership of the Single Market was worth about an additional 4% of UK GDP over the long run.
To give an idea of scale, 4% of GDP of £2,234 billion in 2019 (Figure 3.5), was worth about £86 billion (4/104 x £2,234). This was a benefit to GDP of £1.65 billion a week, or nearly 11 times the weekly net contribution of £152 million (Table 3.1).
The economic benefits of EU membership came mainly from:
- Near-frictionless trade within the EU;
- EU trade agreements with other countries;
- Freedom of movement, which benefits the UK workforce and UK citizens working, studying or retiring in the EU;
- Attractiveness of UK as a destination for FDI to access the EU market;
- Productivity gains from access to the huge EU market with common standards.
Figure 3.5: Annual GDP and estimated economic benefit of EU membership
Benefits to public finances
Public finances are sensitive to changes in GDP and fiscal policy. In its projections, HM Treasury typically assumes that 35% – 37% of GDP flows through to public finances. This means that EU membership benefited UK public finances by around £30bn to £32bn in 2019 or over three times the UK’s net contribution of £9.4 billion.
In other words, EU membership benefited public finances in 2019 to the tune of:
- £580 million – £620 million/week
- £450 – £480 per person per year
- £1.24 – £1.32 per person per day (population of 66.9 million)