Main | Philip Hammond’s statement on guarantees for EU expenditure until 2020: Farmers versus the rest »

"Change Britain" and its fictional figures on the EU budget

The report published by Change Britain on 27 December seems to be using fictional figures with regard to the EU budget.





Let’s take this apart by looking at the gross contribution figure of £19,593 million in 2015. It is misleading to quote this figure in sterling rather than euro since the budget is decided in euro and its value in sterling fluctuates with the sterling-euro exchange rate. During the 2015 financial year, the exchange rate of euro to sterling fluctuated between 1.28 (on 6 January) and 1.44 (on 18 July). Let us take the 1.28 rate since it is the most favourable for the purposes of Change Britain in maximising the size of the budget.


In 2015, the EU’s total revenue collected through the UK authorities, including from the external tariff, was € 21,409.3 million (or £ 16,726 million at the rate of 1.28), nearly 3 billion pounds less than the figure touted by Change Britain. [Source: the 2015 accounts of the European Union confirmed by the Court of Auditors, tab 2015, box AJ99.]


From the same source, the rebate (cell AJ89) was € 6,083.6 million and EU expenditure in the UK (cell AJ84) was € 7,457.6 million.


These give a net contribution figure of € 7,868.1 million or £6,146 million at a rate of € 1.28 to the pound. This is a full £ 4 billion of net contribution less per year (40%) than the £10,353 million that Change Britain is claiming.


Highlighting an accurate figure for Britain’s net contribution is all very well, but to look at the EU budget only in terms of net contributions or net benefits is severely flawed. Whereas payments to farmers are direct and can be seen as welfare payments, the EU’s other 70% of expenditure has different effects. For example, the award of an engineering research contract to a consortium led by a university in Germany is not only an award to Germany. EU research projects have to be multinational though with one leader. The research money will be spent in other member states, like the UK, on personnel or equipment. The results of research will be to the benefit of all users wherever they are located geographically, and will promote economic growth if, in this case, engineering efficiency is improved. Completing such research establishes networks that can be used in the future. In other words, much of the EU’s spending has multiplier effects and is not merely a welfare payment to the country where a receiving bank account is located.


Change Britain also neglects to analyse the cost for Britain in leaving a number of investment programmes run by the European Investment Bank, such as the European Fund for Strategic Investments (EFSI). Worth € 500 billion over 5 years to 2020, this fund provides leverage for investments in innovation infrastructure across Europe, including the UK. Funds are provided by the private sector but are underwritten by the EU’s member states, the European Investment Bank and by the EU budget.


- Giacomo Benedetto, Jean Monnet Chair in European Union Budget Policy, Royal Holloway, University of London, 28 December 2016

Posted on Wednesday, December 28, 2016 at 08:17PM by Registered CommenterDr Giacomo Benedetto | Comments Off