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.Jump to full report >>
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 2016/17 the UK made an estimated gross contribution (after the rebate) of £12.2 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 £8.1 billion.
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 the 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 £7.1 billion between 2010 and 2014.
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 payment on leaving?
The EU expects a payment from the UK to cover its share of the EU’s outstanding spending commitments and liabilities when it leaves. This has been described in the media as an ‘exit bill’ or ‘divorce bill’; the EU see it as settling the accounts. The payment is being negotiated as the ‘single financial settlement’ in the first phase of Brexit negotiations.
Estimates of the net payment range from less than €10 billion to €75 billion. The estimates vary based on the items included and how these are shared. Prime Minister Theresa May says the UK will honour its commitments, but the UK hasn’t indicated which commitments it recognises.
Payments after leaving?
The UK has indicated that it may pay to participate in some EU programmes after Brexit. For instance, the UK might pay 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 discusses how the EU raises and spends money.
Commons Briefing papers CBP-7886
Author: Matthew Keep