The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

How Much The UK Actually Pays The EU

It's a highly contested figure both during and in the aftermath of the Brexit referendum.

The true cost to Britain being a part of the European Union is close to £661 million per week since 2010, a number hidden from the British taxpayers due to an intricate payments system and largely ignored by the mainstream media.

Our estimated figure encompasses £80billion lost to the Treasury after the European Court of Justice forced tax rebates to multinationals.

More Contribution Less Rebate

A key area of controversy is on the rebate, an annual, purported "reduction" in United Kingdom's contribution to the EU budget that's equal to about 66% of the difference between what the UK contributes to the EU budget and its receipts from the EU.

Even after the rebate, in membership fees alone, Britain shelled out £70.6 billion since 2010.

Data derived from a briefing paper on "The UK's contribution to the EU Budget" indicates Britain contributed between £8-10 billion per year. The same report acknowledged "the UK made the second largest net contribution to the EU budget in absolute terms, and the third largest net contribution per head of population" in 2015.

European Union Overspending

If the EU exceeds its budget, as it did in the fiscal year 2014-2015, UK is responsible for footing the difference. We did that year in the amount of £1.7 billion, as reported by the Daily Mail.

The EU demanded the amount after recalculating the income of member states dating back almost 20 years, penalizing the British economy that was found to be larger than previously determined. The article detailed Britain "paid the amount due" in full with two instalments not subject to rebates.

Parliament has no control over these payments since Britain is part of the EU and civil servants are legally obliged to pay these costs.

Bailout Mechanism

Britain is increasingly relied upon as a financial support structure for Eurozone countries facing serious financial difficulty or bankruptcies.

With the International Monetary Fund acting as a backdoor way to financing bailouts, Britain contributed close to £50 billion in financial aid since the fiscal year 2013-2014. It's not the first time Britain stepped in for EU member states' economic woes.

Between 2009-2011, British taxpayers provided Ireland with a backdoor bail-out of more than £14 billion via the Royal Bank of Scotland and Lloyds Banking Group according to a Telegraph article.

The article describes the process by which "RBS made 'capital contributions' totalling £7.6 billion to its Dublin-headquartered subsidiary Ulster Bank Ireland" while "Lloyds transferred £6.41 billion to its Irish operation, Bank of Scotland (Ireland)." With another international rescue provided by the UK government in the amount of £7 billion, as reported by The Guardian in 2010, the UK taxpayer has bolstered the Irish economy with at least £20 billion during that time period.

EU Debt & High Risk Loans

The European Investment Bank and the European Central Bank use the UK's good credit rating to borrow money, making Britain liable for high risk loans and its respective debts.

The UK comes out second from the top in terms of the size of its economy and lending "credit enhancement" to other EU Member States but second from the bottom in terms of benefits drawn according to a study on "UK's Liabilities to the Financial Mechanisms of the European Union".

As published in a 2016 briefing by the National Audit Office on EU-UK Finances, the Balance of Payments Facility allows the EU to offer up medium-term financial assistance to member states outside the euro area. UK is responsible for £1.2 of Hungary, Latvia and Romania's outstanding loans of €8.6 billion.

The European Financial Stabilisation Mechanism allows the EU to grant billions in financial assistance to any member state with £6.6 billion representing the UK's indicative share of the total drawdown from this fund, plus interest.

Additionally, the UK contributed around £8 billion in the past eight years towards the European Development Fund which represents overseas aid.

Migrant expenses

The costs of open borders imposed by the EU is over £6 billion over the course of eight years, with Britain paying tax credits and child benefits to migrants. Migration Watch UK reported UK is "paying more taxes as a result of migration, having less to spend on public services." In 2014/15, the cost to the Exchequer of immigration was £17 billion.

Many migrants don't exhibit the positive fiscal contribution that may help reduce Britain's deficit.

A breakdown of transfers by migrants back home suggest British migrants sent over £16 billion back to foreign nations since 2010. A news report by The Guardian said remittances from the UK could be worth up to $23 billion. Another article in the Express describes migrants sending £11 billion back to foreign nations in 2014, inclusive of money derived from child credits and benefits and equivalent to the same amount as Britain's entire Foreign Aid budget.

These benefits are intended to support British children and are paid for by British taxpayers.

Moreover, the "Freedom of Establishment" within the EU single market costs the UK up to £10 billion per annum in taxes according to a study on "The UK's Lost GDP and Tax Revenues." High-value jobs and the majority of the spending goes to the member state with aggressive tax regimes to attract multinationals while the UK supply chains are staffed mostly with low-skilled, low-wage labour.

The liabilities calculated above don't include match funding required to draw back any EU spending in UK. In order to attract EU investment, Britain has to match the EU's contribution.

Brexit critics' claim that UK paid £156 million a week to the EU last year is grossly underestimated. 


Works Cited:

ECJ judgement tax losses (Franked Investment Income (FII) case, Cadbury Schweppes, USB Deutsche Bank, Marks and Spencer, Littlewoods cases etc.)

Aldrick, Philip. "British taxpayers funded Ireland's £14bn bail-Out." The Telegraph , 19 Jan. 2013, www.telegraph.co.uk/finance/newsbysector/banksandfinance/9813358/British-taxpayers-funded-Irelands-14bn-bail-out.html.

Giannangeli, Marco. "Forget Foreign Aid: British Migrants Send £11BILLION Back to Other Countries in a YEAR." Express.co.uk, Express.co.uk, 20 June 2015, www.express.co.uk/news/uk/585860/Foreign-aid-British-Migrants-11bn-other-countries-year.

Green, Lord Andrew. "The Impact of Immigration on the Public Finances." Migration Watch UK, Migration Watch UK, 17 May 2016, www.migrationwatchuk.org/press-release/448.

Keep, Matthew. "The UK's contribution to the EU Budget." House of Commons Briefing Paper, 8 Aug. 2017, pp. 1–22., researchbriefings.files.parliament.uk/documents/CBP-7886/CBP-7886.pdf .

Kollewe, Julia. "Ireland Bailout: UK to Lend £7bn." The Guardian, Guardian News and Media, 22 Nov. 2010, www.theguardian.com/business/2010/nov/22/ireland-bailout-uk-lends-seven-billion.

Lyddon, Bob. "The UK's Lost GDP and Tax Revenues." THE UK'S LOST GDP AND TAX REVENUES, 2016, www.lyddonconsulting.com/wp-content/uploads/2017/01/The-Brexit-Papers-4-Lost-GDP-Tax-revenues.pdf.

Lyddon, Bob. Uk's Liabilities to the Financial Mechanisms of the European Union. Bruges Group, 2016, www.brugesgroup.com/images/papers/ukliabilitiestotheeu.pdf.

National Audit Office. "Briefing on EU-UK Finances." Briefing on EU-UK Finances, Dec. 2016, pp. 2–29., www.nao.org.uk/wp-content/uploads/2016/12/Briefing-on-EU-UK-finances-2.pdf.

"Remittances: How Much Britain Sends, and Where the Cash Goes – Get the Data." The Guardian, Guardian News and Media, 9 Aug. 2013, www.theguardian.com/global-development/datablog/2013/aug/09/remittances-britain-data.

Stevens, John. "Cameron and Osborne Quietly Pay the £1.7BILLION Bill from Brussels Which They Dismissed as 'Totally Unacceptable'." Daily Mail Online, Associated Newspapers, 17 Sept. 2015, www.dailymail.co.uk/news/article-3237073/Cameron-Osborne-quietly-pay-1-7BILLION-bill-Brussels-dismisses-totally-unacceptable.html.
Not My Brexit
In Defence of the Visegrád Group
 

Comments 5

Guest - Eileen Wright on Monday, 18 September 2017 17:34

So the Remainers seriously want to belong to thus money grabbing organisation! I cannot believe how the EU takes us for a ride, no wonder we have no money left to provide for our own people. It makes one want to WEEP, it is so unfair, it's like the Mafia.

So the Remainers seriously want to belong to thus money grabbing organisation! I cannot believe how the EU takes us for a ride, no wonder we have no money left to provide for our own people. It makes one want to WEEP, it is so unfair, it's like the Mafia.
Guest - Robin Smith on Wednesday, 20 September 2017 14:00

To think what we could do with all that money that has been wasted on the EU £660million a week makes the £350 million mentioned insignificant, we pay this money to trade with the EU yet we import more than we export now I'm no business man but if tariffs were introduced surely we would be better off as we would charge them tariffs for there goods as well ,we could then compensate businesses for the tariffs paid and still have money left over to fund home charities.

To think what we could do with all that money that has been wasted on the EU £660million a week makes the £350 million mentioned insignificant, we pay this money to trade with the EU yet we import more than we export now I'm no business man but if tariffs were introduced surely we would be better off as we would charge them tariffs for there goods as well ,we could then compensate businesses for the tariffs paid and still have money left over to fund home charities.
Guest - Jon Gray on Wednesday, 20 September 2017 15:01

So, let me get this right. You are mixing in the £80billion in tax that we illegally levied on businesses as a charge from the EU? We knew about this problem (which incidentally was not 'largely ignored' by the mainstream media https://www.theguardian.com/commentisfree/2017/may/26/uk-billion-corporate-tax-refund-uk-european-law), but instead of solving the issue, we let it trundle through the courts and let it compound, year on year. That is not the EU's fault. We agreed to abide by EU laws, but flouted them. To include this amount to make your hyperbolic claims is disingenuous, to say the least - Johnsonian in its claims (Boris that is). The other big whopper is the one about the £1.7billion we paid in recalculated contributions to the EU after understating our own economy (https://www.theguardian.com/world/2014/oct/23/uk-european-commission-eu-budget-contribution). Using the Daily Mail to support your point, speaks volumes about the credibility of this report.

So, let me get this right. You are mixing in the £80billion in tax that we illegally levied on businesses as a charge from the EU? We knew about this problem (which incidentally was not 'largely ignored' by the mainstream media https://www.theguardian.com/commentisfree/2017/may/26/uk-billion-corporate-tax-refund-uk-european-law), but instead of solving the issue, we let it trundle through the courts and let it compound, year on year. That is not the EU's fault. We agreed to abide by EU laws, but flouted them. To include this amount to make your hyperbolic claims is disingenuous, to say the least - Johnsonian in its claims (Boris that is). The other big whopper is the one about the £1.7billion we paid in recalculated contributions to the EU after understating our own economy (https://www.theguardian.com/world/2014/oct/23/uk-european-commission-eu-budget-contribution). Using the Daily Mail to support your point, speaks volumes about the credibility of this report.
Robert Oulds on Wednesday, 20 September 2017 15:17

Jon, thanks for engaging with us. The £1.7 billion was still paid in full, when one takes in the reduction in the abatement. That is despite our then Prime Minister, saying the bill would not be paid. Says volumes about where power lies, and its not with people we have elected; at least whilst we are in the EU.

Thanks for your comments on tax as well, surely we should make the rules in line with international conventions, and not the ECJ's ridiculous interpretations of the 1961 OECD Convention. You can see below a series of articles that show how the ECJ has continually been making decisions that allow certain corporations to escape billions in tax. This just puts more of a burden onto SMEs and the taxpayer.
http://www.brugesgroup.com/taxation
The President of the European Commission, Jean Claude Junker, is notorious in this area for making sweetheart deals in Luxembourg that would then be used under EU law to avoid tax. We are paying the price for this.
There was a case where the EU tried to make Ireland tax Apple, that was more about bullying Ireland into changing its competitive tax rules. That however was overturned by the ECJ. Where there are changes at the EU level, these are brought about by the G20 whose leaders are thoroughly fed up with the ludicrous interpretation of international tax law made by the EU's top court.

The EU is a racket for those with access to get the policies they want particularly when it comes to tax. Its time we left.

Jon, thanks for engaging with us. The £1.7 billion was still paid in full, when one takes in the reduction in the abatement. That is despite our then Prime Minister, saying the bill would not be paid. Says volumes about where power lies, and its not with people we have elected; at least whilst we are in the EU. Thanks for your comments on tax as well, surely we should make the rules in line with international conventions, and not the ECJ's ridiculous interpretations of the 1961 OECD Convention. You can see below a series of articles that show how the ECJ has continually been making decisions that allow certain corporations to escape billions in tax. This just puts more of a burden onto SMEs and the taxpayer. http://www.brugesgroup.com/taxation The President of the European Commission, Jean Claude Junker, is notorious in this area for making sweetheart deals in Luxembourg that would then be used under EU law to avoid tax. We are paying the price for this. There was a case where the EU tried to make Ireland tax Apple, that was more about bullying Ireland into changing its competitive tax rules. That however was overturned by the ECJ. Where there are changes at the EU level, these are brought about by the G20 whose leaders are thoroughly fed up with the ludicrous interpretation of international tax law made by the EU's top court. The EU is a racket for those with access to get the policies they want particularly when it comes to tax. Its time we left.
Guest - Roy meynell on Wednesday, 20 September 2017 21:42

The whole financial situstion is out of control,no wonder we have no money for our public services,when so much of our money is given in subsidies and bale outs .billions wasted and money paid to incoming migrates which will never ever produce any benefits to this country ,how could this situation become so out of control ,with so much money wasted ,giving money to bale out other countries and multinational .the hole situation has been lost by scandalous wast

The whole financial situstion is out of control,no wonder we have no money for our public services,when so much of our money is given in subsidies and bale outs .billions wasted and money paid to incoming migrates which will never ever produce any benefits to this country ,how could this situation become so out of control ,with so much money wasted ,giving money to bale out other countries and multinational .the hole situation has been lost by scandalous wast
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Monday, 23 October 2017