The UK’s contribution to the EU budget

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 are also discussed.

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 is deducted from its contribution. The rebate aims to correct the issue of the UK making relatively large net contributions to the EU.

In 2015/16 the UK made an estimated gross contribution (after the rebate) of £13.6 billion. The UK received £2.8 billion of public sector receipts from the EU, so the UK’s net public sector contribution to the EU was an estimated £10.8 billion.

UK's net contribution to the EU budget
There are different measures of the funds the UK receives from the EU. The above figure of £2.8 billion includes only funding allocated directly to the UK government to manage. However, the European Commission also provides other 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.

Once the UK has left the EU it may still make financial contributions to the EU. The Prime Minister has said that the UK may pay to participate in some EU programmes once it has left. This might, for instance, see the UK paying to remain in Horizon 2020, the EU’s research and innovation programme, or any successor programme. The cost of participating in EU programmes will form part of the UK’s exit negotiations.

In exchange for preferential access to the EU’s single market, some non-EU countries contribute grants to poorer EU Member States. Mrs May has said that the UK will leave the EU’s single market, so it seems unlikely that the UK will contribute similar grants.

Negotiations are likely over the extent to which the UK will make a payment to cover its share of outstanding EU spending commitments and liabilities. Such a payment has been described as a ‘divorce bill’ or ‘exit bill’ in the media. The Financial Times estimate that a payment of between €20 billion and €60 billion could potentially be made, but ultimately the extent of any payment will be decided in exit negotiations.

The UK Parliamnets briefing A guide to the EU budget provides further detail about the EU’s revenue raising and spending.