House of Commons Library

Brexit: UK Funding from the EU

Published Wednesday, January 10, 2018

This Commons Library briefing looks at the funding received by the UK from EU institutions and considers the implications of Brexit on the EU as a source of funding for regional development, agriculture support, research and innovation and other areas.

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Funding received by the UK

The UK will remain a member of the EU until the terms of ‘Brexit’ have been negotiated. Until then it will continue to make contributions to the EU budget and receive EU funding through various channels.

The UK is one of the leading Member States in securing funding for research and innovation and various other projects, with a typical aggregate value of £1-1.5 billion per year.

While the UK Government has made guarantees about the continuation of funding under EU programmes after the UK’s departure from the EU, continued access to any EU funding is likely to be a significant feature of Brexit negotiations.

For the current funding period (2014-20), the UK has been allocated €17.2 billion and €22.5 billion respectively.

EU funding channels

The majority of funding is administered in partnership with national and regional authorities in member states, though a share of EU funding is directly administered by the European Commission.

The two most significant funding channels are the European Structural and Investment (ESI) Funds (discussed in section 2 of the PDF) and the European Agricultural Guarantee Fund (discussed in section 3 of the PDF).

European Structural and Investment Funds

The ESI Funds are the EU’s instrument for reducing disparities in the level of development of its various regions and for helping less developed regions to catch up.

The bulk of UK funding via this channel comes through the European Regional Development Fund (ERDF), which has been allocated €5.8 billion of EU funds and the European Social Fund (ESF) with an allocation of €4.9 billion.

Different regions within the UK have been allocated varying levels of funding, with less developed areas (particularly in West Wales and the South West of England) receiving more per person than other areas.

European Agricultural Guarantee Fund

The European Agricultural Guarantee Fund (EAGF) is the primary financial mechanism used for the implementation of the EU’s Commons Agricultural Policy (CAP). The EAGF consists of direct payments and market measures to support the agricultural sector and the UK has been allocated €22.5 billion for the period 2014-20.

Other funding streams

Organisations in the UK can also apply directly to the European Commission for funding from various other streams, often on a competitive basis following calls for applications.

Funding by other EU institutions

In addition, projects in the UK can be supported by EU institutions with funding that falls outside the EU Budget.

Most notably, the European Investment Bank (EIB) – which borrows money on capital markets and lends it on favourable terms to projects that support EU objectives – committed over €36 billion to UK projects between 2011 and 2016.

Funding for non-Member States

Non-Member States also have access to certain streams of EU funding, though this is typically dependent on payments into the EU Budget – over the 2014-21 period, Norway is contributing around €2.7 billion in EU grants.

Commons Briefing papers CBP-7847

Authors: Steven Ayres; Philip Brien

Topics: Employment, EU budget, EU grants and loans, Public administration, Research and innovation, Training

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