How Much the UK Actually Pays the EU

​It’s a highly contested figure both during and in the aftermath of the Brexit referendum.

The true cost to Britain being a part of the European Union is close to £661 million per week since 2010, a number hidden from the British taxpayers due to an intricate payments system and largely ignored by the mainstream media.

Our estimated figure encompasses £80billion lost to the Treasury after the European Court of Justice forced tax rebates to multinationals.

More Contribution Less Rebate

A key area of controversy is on the rebate, an annual, purported “reduction” in United Kingdom’s contribution to the EU budget that’s equal to about 66% of the difference between what the UK contributes to the EU budget and its receipts from the EU.

Even after the rebate, in membership fees alone, Britain shelled out £70.6 billion since 2010.

Data derived from a briefing paper on “The UK’s contribution to the EU Budget” indicates Britain contributed between £8-10 billion per year. The same report acknowledged “the UK made the second largest net contribution to the EU budget in absolute terms, and the third largest net contribution per head of population” in 2015.

European Union Overspending

If the EU exceeds its budget, as it did in the fiscal year 2014-2015, UK is responsible for footing the difference. We did that year in the amount of £1.7 billion, as reported by the Daily Mail.

The EU demanded the amount after recalculating the income of member states dating back almost 20 years, penalizing the British economy that was found to be larger than previously determined. The article detailed Britain “paid the amount due” in full with two instalments not subject to rebates.

Parliament has no control over these payments since Britain is part of the EU and civil servants are legally obliged to pay these costs.

Bailout Mechanism

Britain is increasingly relied upon as a financial support structure for Eurozone countries facing serious financial difficulty or bankruptcies.

With the International Monetary Fund acting as a backdoor way to financing bailouts, Britain contributed close to £50 billion in financial aid since the fiscal year 2013-2014. It’s not the first time Britain stepped in for EU member states’ economic woes.

Between 2009-2011, British taxpayers provided Ireland with a backdoor bail-out of more than £14 billion via the Royal Bank of Scotland and Lloyds Banking Group according to a Telegraph article.

The article describes the process by which “RBS made ‘capital contributions’ totalling £7.6 billion to its Dublin-headquartered subsidiary Ulster Bank Ireland” while “Lloyds transferred £6.41 billion to its Irish operation, Bank of Scotland (Ireland).” With another international rescue provided by the UK government in the amount of £7 billion, as reported by The Guardian in 2010, the UK taxpayer has bolstered the Irish economy with at least £20 billion during that time period.

EU Debt & High Risk Loans

The European Investment Bank and the European Central Bank use the UK’s good credit rating to borrow money, making Britain liable for high risk loans and its respective debts.

The UK comes out second from the top in terms of the size of its economy and lending “credit enhancement” to other EU Member States but second from the bottom in terms of benefits drawn according to a study on “UK’s Liabilities to the Financial Mechanisms of the European Union”.

As published in a 2016 briefing by the National Audit Office on EU-UK Finances, the Balance of Payments Facility allows the EU to offer up medium-term financial assistance to member states outside the euro area. UK is responsible for £1.2 of Hungary, Latvia and Romania’s outstanding loans of €8.6 billion.

The European Financial Stabilisation Mechanism allows the EU to grant billions in financial assistance to any member state with £6.6 billion representing the UK’s indicative share of the total drawdown from this fund, plus interest.

Additionally, the UK contributed around £8 billion in the past eight years towards the European Development Fund which represents overseas aid.

Migrant expenses

The costs of open borders imposed by the EU is over £6 billion over the course of eight years, with Britain paying tax credits and child benefits to migrants. Migration Watch UK reported UK is “paying more taxes as a result of migration, having less to spend on public services.” In 2014/15, the cost to the Exchequer of immigration was £17 billion.

Many migrants don’t exhibit the positive fiscal contribution that may help reduce Britain’s deficit.

A breakdown of transfers by migrants back home suggest British migrants sent over £16 billion back to foreign nations since 2010. A news report by The Guardian said remittances from the UK could be worth up to $23 billion. Another article in the Express describes migrants sending £11 billion back to foreign nations in 2014, inclusive of money derived from child credits and benefits and equivalent to the same amount as Britain’s entire Foreign Aid budget.

These benefits are intended to support British children and are paid for by British taxpayers.

Moreover, the “Freedom of Establishment” within the EU single market costs the UK up to £10 billion per annum in taxes according to a study on “The UK’s Lost GDP and Tax Revenues.” High-value jobs and the majority of the spending goes to the member state with aggressive tax regimes to attract multinationals while the UK supply chains are staffed mostly with low-skilled, low-wage labour.

The liabilities calculated above don’t include match funding required to draw back any EU spending in UK. In order to attract EU investment, Britain has to match the EU’s contribution.

Brexit critics’ claim that UK paid £156 million a week to the EU last year is grossly underestimated.

​Works Cited:

ECJ judgement tax losses (Franked Investment Income (FII) case, Cadbury Schweppes, USB Deutsche Bank, Marks and Spencer, Littlewoods cases etc.)

Aldrick, Philip. “British taxpayers funded Ireland’s £14bn bail-Out.” The Telegraph , 19 Jan. 2013, www.telegraph.co.uk/finance/newsbysector/banksandfinance/9813358/British-taxpayers-funded-Irelands-14bn-bail-out.html.

Giannangeli, Marco. “Forget Foreign Aid: British Migrants Send £11BILLION Back to Other Countries in a YEAR.” Express.co.uk, Express.co.uk, 20 June 2015, www.express.co.uk/news/uk/585860/Foreign-aid-British-Migrants-11bn-other-countries-year.

Green, Lord Andrew. “The Impact of Immigration on the Public Finances.” Migration Watch UK, Migration Watch UK, 17 May 2016, www.migrationwatchuk.org/press-release/448.

Keep, Matthew. “The UK’s contribution to the EU Budget.” House of Commons Briefing Paper, 8 Aug. 2017, pp. 1–22., researchbriefings.files.parliament.uk/documents/CBP-7886/CBP-7886.pdf .

Kollewe, Julia. “Ireland Bailout: UK to Lend £7bn.” The Guardian, Guardian News and Media, 22 Nov. 2010, www.theguardian.com/business/2010/nov/22/ireland-bailout-uk-lends-seven-billion.

Lyddon, Bob. “The UK’s Lost GDP and Tax Revenues.” THE UK’S LOST GDP AND TAX REVENUES, 2016, www.lyddonconsulting.com/wp-content/uploads/2017/01/The-Brexit-Papers-4-Lost-GDP-Tax-revenues.pdf.

Lyddon, Bob. Uk’s Liabilities to the Financial Mechanisms of the European Union. Bruges Group, 2016, www.brugesgroup.com/images/papers/ukliabilitiestotheeu.pdf.

National Audit Office. “Briefing on EU-UK Finances.” Briefing on EU-UK Finances, Dec. 2016, pp. 2–29., www.nao.org.uk/wp-content/uploads/2016/12/Briefing-on-EU-UK-finances-2.pdf.

“Remittances: How Much Britain Sends, and Where the Cash Goes – Get the Data.” The Guardian, Guardian News and Media, 9 Aug. 2013, www.theguardian.com/global-development/datablog/2013/aug/09/remittances-britain-data.

Stevens, John. “Cameron and Osborne Quietly Pay the £1.7BILLION Bill from Brussels Which They Dismissed as ‘Totally Unacceptable’.” Daily Mail Online, Associated Newspapers, 17 Sept. 2015, www.dailymail.co.uk/news/article-3237073/Cameron-Osborne-quietly-pay-1-7BILLION-bill-Brussels-dismisses-totally-unacceptable.html.