Last year I wrote a blog on the UK’s net contribution to the CAP for 2011. The newest figures are now for 2012, so what do they show?
In 2012, the UK contributed 13,461 million euro to the entire EU budget. Britain got back spending of 6,934 million euro, so that the British net contribution was 6,527 million euro. Looking at the whole budget, the UK received 6,934 out of 126,349 million (or 5.5% of total spending).
CAP spending in the UK in 2012 was 3,341 million euro. In the whole of the EU, CAP spending was 43,592 million euro, so the UK took 7.7% of the share of CAP spending, which is proportionately higher than other areas of EU spending within the UK (7.7% for CAP compared to 5.6% of overall spending).
How much does the UK put in and how much does it get back? In 2012, the CAP was 43,592 million out of 126,349 million and represented 34.8% of EU spending. 34.8% of the UK gross contribution is 4,684 million euro. CAP spending in the UK (as mentioned above) was 3,341 million euro. So what we have is this:
EU budget 2012
UK contribution to CAP: 4,684 million euro
UK receives from CAP: 3,341 million euro
UK net contribution to CAP: 1,343 million euro
If we divide the above figures by 62 million we have the average amount per person in the UK: approximately € 75 per person in terms of gross contribution to the CAP and just over € 20 per person in terms of net contribution.
It looks like the UK is a big net contributor to the CAP but compared to other policy areas the net contribution is relatively modest. Whereas 34.5% of total EU expenditure was devoted to agriculture in 2012, 48.2% of EU expenditure in the UK fell under the CAP. Under the old multiannual budget of 2007-2013, if there was going to be an EU budget at all, it seems that the UK was in relative terms a winner from agricultural spending.
The figures used in this blog have been obtained from the Financial Report of the European Union 2012.
Following David Cameron’s famous veto to a treaty change for dealing with the crisis of the Eurozone two years ago, I posted a blog here that wondered comically what a post-exit UK would be like. Now that exit looks more probable, it is time that UKIP and the pro-exit Tories are held to account since leaving the EU is not cost-free and is full of uncertainty. The safest course of action is to stay part of the EU, which is the largest economic space in the World exceeding the GDP of North America. Britain’s net contribution to the EU budget is only 1% of total public spending, a small price for access to that most successful market and the chance to shape its rules.
Hard Eurosceptics tell us that the UK could have a status like Norway or Switzerland, with access to the single market. It could, but this would have to be granted unanimously by the rest of the EU and could be vetoed by just one member state – and the year of a new EU treaty and David Cameron’s referendum, 2017, happens to be election year in France. De Gaulle said “no” to Britain twice, in 1962 and 1967, and Hollande or a Gaullist successor may feel pressured to do so again – or a French President could hold a referendum on a trade deal for the UK whose result would be unpredictable. Further, to get access to the single market, Norway and Switzerland have to allow full freedom of movement to EU citizens as part of the deal and yet free migration is one of the issues most unpopular with British Eurosceptics. For Norway and Switzerland, without free migration there is no access to free trade. To be part of the single market, Norway and Switzerland also have to obey its other rules without getting a vote to shape those rules.
The Eurosceptics also like to tell us that by breaking free, Britain will be able to trade freely with the rest of the World. But there is nothing to stop Britain trading already with the rest of the World. The EU certainly doesn’t stop Germany from being one of the World’s largest exporters. Cutting Britain out of the EU would weaken its trade position since the EU negotiates as a single bloc at World Trade talks and negotiates powerfully as the World’s largest economy. When the big deals are done between the EU, NAFTA and China, how much weight would Britain carry on its own?
Do not under-estimate the offence that leaving the EU would cause to France and Germany. A deal to grant trade access to the UK would not go as far as the existing single market and would damage Britain. Just one example is the City’s ability to trade the euro against currencies other than Sterling on the money markets. Although the euro is not the currency of the UK, the City can do this because of the single market. A lesser version of the single market for Britain would probably have this feature withdrawn.
Finally, Eurosceptics assure us that given Britain’s big trade deficit, there is no way that France would bloc a trade deal for Britain. Are they sure? Is this what François Hollande told them? Why take the risk of leaving the EU? Sure, Britain has a big trade deficit but is this something to be proud of? If ever that deficit were turning towards surplus with British goods competing well against goods from France for example, with a post-exit trade deal there is nothing to stop the EU reneging or imposing new conditions if circumstances change. The EU-Switzerland deal allows either the EU or Switzerland to abandon the agreement – or aspects of it - at any time. An EU-UK trade deal could also be unilaterally curtailed by the EU at a later date.
Radek Sikorski, the Centre-Right (EPP) Foreign Minister of Poland is taking French lessons. According to euobserver he is betting on getting the EU's HRVP post currently occupied by Catherine Ashton of the Socialists. Learing to speak French would secure the support of the French government in his appointment since French is apparently the international language of diplomacy.
Since the President of the European Commission will come from the party family that wins the European Parliament elections (currently the EPP), and the President of the European Council will be appointed by the majority party among the Heads of Government (also the EPP), the post of High Representative for Foreign and Security Policy and Vice-President of the Commission (HRVP) is allocated as the runner-up prize (currently to the Socialists).
Does the fact that Radek Sikorski and Carl Bildt are so hotly tipped for HRVP show that the EPP is planning to lose the EP elections or does it show that EPP is planning to win and to carve up all the posts without any consolation prizes for the Socialists? Could the EU be moving in a more majoritarian/winner-takes-all system?
In recent days the European Commission has asked for € 3.9 billion extra to supplement the EU’s annual budget of 2013. This has unleashed some predictable opposition from Eurosceptics including those in the British government:
What is at stake and what is the fuss?
First of all, the EU’s annual budget usually works out at around 130 to 140 billion euro in payments. The amount requested by the Commission is for bills due (and originally agreed) for the annual budget just for this year. This money is neither for next year nor for the far larger multiannual agreement for the years 2014-2020, which has still not been ratified by the European Parliament.
So how come the Commission waits until late September before asking for a top-up on the budget for 2013? According to EU rules, annual budgets are agreed in two figures: commitments and payments. Commitments are the maximum to which the EU “commits” itself to spend in any one policy area. Payments are only fully released once all the conditions of the commitments have been met. Because conditions are never met by 100% payments always come in lower than commitments. EU spending is planned over multiannual projects – hence one of the reasons why spending is agreed within a multiannual framework. Commitments agreed in the annual budget of 2010 trigger the award of contracts and the start of spending programmes. Some payments for those programmes are released up front with the balance payable upon completion when the recipient can show that the programme is successfully delivered and that expenditure is justified. Usually this takes place after two or three years on a basis called N+2 or N+3.
The Commission very simply is claiming that the original budget for 2013 agreed 10 months ago provided insufficient payments to cover what is due for contracts and commitments agreed by the Council of the EU (representing national governments) in 2010 and 2011 under N+2 or N+3. Regional governments and other recipients have made justified claims for payments based on commitments from several years ago. The British government claims that such payments don’t need extra amounts to be voted but could be funded through recycling unspent funds elsewhere in the budget.
In the end, legal arguments are made by the Commission and the European Parliament. Certain national governments will try to oppose voting the funds due to domestic Euroscepticism. However, in the background is multiannual budgeting for 2014-2020. The European Parliament has made very clear that it will not approve the new multiannual agreement that takes effect at the start of 2014 unless all the outstanding bills for 2013 are paid by the Council. The proposed multiannual agreement cuts commitments and payments by 5% compared to the previous agreement. No agreement, if that is what happens, will mean that the current agreement for 2007-2013 will roll over with an increase for inflation. In other words, if the British want to pay less with the new agreement, for 2013 only they will have to pay more. The dispute on the final € 3.9 billion for the budget of 2013 is therefore worth more than the sum of its parts.