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How does the EU spend its money?

By newadmin / Published on Monday, 05 Feb 2018 07:14 AM / No Comments / 10 views


Claims and counter-claims about money played a key role in Britain’s decision to leave the EU, and have dominated the divorce negotiations so far.

Vote Leave’s infamous claim that the UK was sending £350m to the EU every week, and that this could instead be spent on the NHS, was roundly criticised as inaccurate and misleading. But there is no doubt that the EU’s opaque funding structure has led to confusion about how it actually spends its money.

How much does the EU get?

Every seven years, EU leaders agree a long-term plan for the bloc’s budget – how big it is and what the money should be spent on.

The last round of budget negotiations took place in 2012 for the period 2014-2020 and, for the first time in the organisation’s history, leaders decided to cut the amount it receives and spends.

What does it spend it on?

The BBC says the EU spent a total of €138.44bn (£106.13bn) in 2014, the first year of the current budget. Of that, almost 80% went to two main areas: agriculture and fisheries – and development projects in poor areas.

How much is spent on agriculture?

€43bn (£32.96bn) is currently spent on direct payments to farmers. Anyone in the EU who has land used for agriculture can receive a payment, under a scheme “aimed at ensuring the economic viability of the EU’s eight million farmers [which accounts] for almost half of their income”, says the BBC

The UK received about 7% of the total agriculture and fisheries payments, ranking sixth among EU member states.

The huge spending on farming is increasingly coming under fire. Politico says traditionally cash payments were linked to production, “leading to embarrassing overproduction. Now, we’re stuck in a system where banks, and even the Queen of England, receive gigantic amounts of taxpayer money simply because they happen to own agricultural land — regardless of what they produce, or if they produce anything at all”.

And how much on development?

The second biggest area of expenditure is developing poorer countries and regions. In 2014, the EU spent €31bn (£23.76bn) on regional development, on projects such business start-ups, roads and railways, renewable energy projects, education and health programmes, and charities.

By far the biggest recipient of all development payments was Poland, followed by Hungary, Greece, Italy and Spain.

What else is the money spent on?

Most of the rest of the EU budget is spent on improving EU growth through investing in research, innovation and education, namely through the Horzon2020 and Erasmus+ schemes, and on the EU’s foreign policy and international aid programme.

The EU employs a total of 55,000 people, and spends €8bn (£6.13bn), or 6% of the total, on administering its various institutions. European Parliament administrative costs, including interpretation and translation services for 24 official languages, came to €1.7bn (£1.3bn) last year. The rest went to the European Council, the European Court of Justice, Court of Auditors and the EU foreign affairs and diplomatic service.

How much does the UK contribute and get back?

National contributions are dictated by the size of the individual countries’ economy but roughly work out to around 1% of GDP. According to the Office for National Statistics, the UK’s gross contribution to EU institutions was £19.1bn in 2015, with Britain getting back £9.2bn.

This figure is often quoted by Eurospectics as proof the UK’s membership for the EU is not value for money.

During the referendum, the chair of Vote Leave, Gisela Stuart, claimed: “For every £2 we send to Brussels, we get £1 back and it comes back with a tag on it on what we have to spend it on.”

This is “broadly correct”, writes Robert Ackrill on The Conversation, although the oft-cited £350m-a-week figure fails to take into account the UK’s rebate and money it receives back.

Such a focus on these numbers “also fails to put into context the small scale of EU budget transfers, when compared with UK national expenditure”, says Ackrill.

How will the EU fill the funding shortfall after Britain leaves?

As talks begin over the next seven-year budget to come into effect in 2021, the EU is facing a huge funding shortfall when Britain leaves.

European Commission chief Jean-Claude Juncker started the year by calling on the remaining 27 EU countries to contribute more to foot the bill.

At a time of rampant Euroscepticism, “Brussels should be slimming down and reforming its budget, not hiking up the price tag”, says Politico, “and yet the Commission’s solution to limit spending cuts appears to be to ask citizens to pay more”.

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