Britain's net contributions to the EU Budget set to double

By Ruth Lea

The UK's net contributions to the EU Budget are expected to average almost £6½ bn for the years 2011-2013 – double the average of the decade from 1997 to 2006, which averaged £3¼ bn.

Summary

Over the decade 1997 to 2006 Britain's gross contributions to the EU Budget averaged £10½ bn a year whilst the net contributions averaged £3¼ bn.

For the current 7-year EU financing period (2007-13) both these sets of figures are expected to rise significantly. Indeed the, just released, estimated net contributions for 2007 are £4.7bn. Gross contributions are forecast to run at more than £14bn (in 2004 prices) whilst average net contributions will be over £5½ bn. Reflecting a smaller rebate and weaker receipts in the final 3 years of this financing period, net contributions are expected to average almost £6½ bn for the years 2011-2013 – double the average of the decade from 1997 to 2006.

Recent data, 1997-2006

The net annual public sector contributions to the EU budget averaged about £3¼ bn over the decade from 1997. Gross contributions, arguably, the more relevant statistic because they represent spending over which the British Government has no control over basic allocation, run far higher. Indeed they have averaged £10½ bn for the decade 1997-2006. The data for the years 1997 to 2006, along with an estimate for 2007, are shown in Table 1 below.

Table 1: UK contributions to and public sector receipts from the EU Budget, 1997-2007 (£m)

Sources: (1) House of Commons Library, answer to PQ number 130155 from the Hon Bernard Jenkin MP, May 2007, for the years 1997 to 2004. The data were taken from various editions of the annual Treasury publication European Community Finances. (2) HM Treasury, European Community Finances: Statement on the 2007 EC Budget and measures to counter fraud and financial mismanagement, Cm7090, May 2007, for the years 2005 to 2007 (Table 3). The figures for 2007 in the above table are estimates.

* The figures exclude private sector receipts which were estimated to be around £575m in 2006.

Financing period, 2007-2013

Net annual public sector contributions are set to rise significantly under the current EU financing period (2007-2013), compared with the past decade. This is especially the case from 2010 when the UK's rebate ('abatement') is set to fall compared with the previous two years and expected receipts are expected to weaken. By 2011-2013 the annual average net contribution is expected to be around £6½ bn (in 2004 prices).

The annual average figure for gross contributions is forecast to be over £14bn (in 2004 prices) for the 7-year period 2007-2013 and net contributions to be £5½ bn.

Table 2: Contributions to the EU Budget, 2007-2013 (£bn, 2004 prices, payments)

Source: House of Commons Library, answer to PQ number 130155 from the Hon Bernard Jenkin MP, May 2007, from a WPQ (31 January 2006). A number of the figures were given as ranges.

* Notes: according to Table 1, above, the estimated net contributions for 2007 were £4.7bn in current prices – but they are estimates and subject to revision. There are rounding errors in the table.

Notes on the author:
Ruth Lea is currently Director of the Centre for Policy Studies. She is a Governor of the London School of Economics and a non-executive director of Arbuthnot Banking Group plc. She is the author of many papers on economic matters and writes regularly for the press. Ruth was Head of the Policy Unit at the Institute of Directors (IoD) between 1995 and 2003, before which she was the Economics Editor at ITN, Chief Economist at Mitsubishi Bank and Chief UK Economist at Lehman Brothers. She also spent 16 years in the Civil Service in the Treasury, the Department of Trade and Industry and the Central Statistical Office. She has served on the Council of the Royal Economic Society, the National Consumer Council, the Nurses' Pay Review Body, the ONS Statistics Advisory Committee, the ESRC Research Priorities Board and the Retail Prices Advisory Committee.