The Business, 8th June 2007

Britain’s contributions to Brussels budget are set to double
By Bill Jamieson, 06/06/07

BRITAIN’S annual net contributions to the EU budget are expected to average almost £6.5bn (E9.5bn, $12.9bn) for the years 2011-2013 – double that of the decade from 1997 to 2006.

The figures, from think-tank Global Vision, show a sharp rise in the UK’s gross contribution, from £7.9bn in 1997 to £12.6bn this year and £14.4bn in 2010.

The calculations are based on seven-year EU budget proposals agreed by Prime Minister Tony Blair after two days of talks.

Under the agreement, the UK agreed to give up E10.5bn (£7bn) of its rebate, some 20%, while the budget grows to E862bn, helping to fund the new member states. France agreed to a budget review in 2008-09, but with no guarantee of cuts in farm subsidies.

Between 1997 and 2006, Britain’s gross contributions to the EU budget averaged £10.5bn a year and a net £3.25bn on average. For the seven-year EU financing period to 2013, both figures are expected to surge.

Indeed, the estimated net contributions for this year are £4.7bn. Gross contributions, says Global Vision’s Ruth Lea, are forecast to run at more than £14bn (at 2004 prices) while average net contributions will be some £5.5bn. Reflecting a smaller rebate and weaker receipts in the final three years of this financing period, net contributions are expected to average almost £6.5bn for 2011-2013 – double the £3.25bn of the decade from 1997 to 2006.

Gross contributions, arguably more relevant because they represent spending over which the British government has no control over basic allocation, averaged £10.5bn for 1997-2006.

The figures are likely to renew fierce debate as to whether the money is wisely spent and whether the UK is getting value for money. Gordon Brown, set to become Prime Minister on 27 June as Blair attends his last EU summit, will not find the rising costs to his liking.