House of Commons Library

The UK's contribution to the EU budget

Published Friday, March 23, 2018

This note considers how much the UK contributes to the EU budget and how much it receives back. Potential payments to the EU on or after Brexit - such as the exit bill - are also discussed.

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The UK’s contribution to the EU budget

As a member of the European Union the UK makes payments, or contributions, to the EU budget. The UK also receives funding, or receipts, from the EU. The EU provides funding for various agricultural, social, economic development and competitiveness programmes.

The UK receives a rebate from the EU which reduces its contribution. The rebate aims to correct the issue of the UK making relatively large net contributions to the EU.

In 2017 the UK made an estimated gross contribution (after the rebate) of £13.0 billion. The UK received £4.1 billion of public sector receipts from the EU, so the UK’s net public sector contribution to the EU was an estimated £8.9 billion.

 UK's net contribution to the EU

There are different ways to measure the funds the UK receives from the EU. The above figure of £4.1 billion includes only funding allocated to UK government to manage. However, the European Commission also allocates funding directly to UK organisations, often following a competitive process. In recent years these funds have been worth around £1 billion - £1.5 billion to the UK. Accounting for these receipts results in the UK making an average net contribution of £8.5 billion between 2011 and 2015.

Brexit and the UK’s contribution

The UK will remain a member of the EU until its departure has been negotiated and will continue to contribute to the EU budget until it formally leaves.

A financial settlement for the UK’s withdrawal

The UK and EU have reached a political agreement on a financial settlement for the UK’s withdrawal. Often described by the media as the ‘divorce bill’, the agreed approach for calculating the settlement is based on the principles that:

  • the UK pays for its share of the commitments taken on during its EU Membership
  • no remaining Member State is made financially worse off by the UK’s withdrawal
  • the UK should neither pay more nor earlier than if it had remained a Member State

The UK Government costs the settlement at around £35 billion-£39 billion. However, the true cost will not be known until all the future payments have been made.

Payments after leaving?

The UK Government says that it may pay to participate in some EU programmes after Brexit. For instance, the UK might contribute to remain in Horizon 2020, the EU’s research and innovation programme. Exit negotiations will determine the extent of the UK’s future participation in EU programmes and any cost.

This briefing focuses on the UK’s involvement with the EU budget. The Library briefing A guide to the EU budget

 

Commons Briefing papers CBP-7886

Author: Matthew Keep

Topics: Common Agricultural Policy, EU budget, EU grants and loans, EU institutions, Public expenditure

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