House of Commons Library

The UK's contribution to the EU budget

Published Tuesday, August 8, 2017

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 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.

UK's contribution to the EU Budget

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.

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 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. The Library briefing Brexit: the exit bill discusses how negotiations have been progressing.

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. The UK Government says it will meet its obligations, but reject speculation of a large settlement.

Payments after leaving?

In February 2017 the Government’s Brexit White Paper said that the UK 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

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

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