4.2 Key facts

(I) Expansion

The EU's budget has expanded since the 1960s, when Community spending was trivial (around 0.03% of aggregate GDP in 1960). It is currently comfortably over 1% of GNP/GNI. It has a revenue, and hence spending, ceiling of 1.24% of GNI.

EU expenditure in 1970, 1980, 1990, 1995, 2000

	1970	1980	1990	1995	2000
Total EU expenditure (€m)	3,576	16,455	45,608	68,408	92,254
Per capita expenditure (€)	19	63	139	183	244
EU expenditure as % of public-sector expenditure in member states	2.00	1.70	2.00	2.10	2.40
Annual rate of growth in nominal terms (%)	73.10	11.44	7.90	11.30	8.60
Annual rate of growth in real terms (%)	61.5	1.70	2.60	7.70	8.60
EU expenditure as % of member states' GDP	0.73	0.80	0.94	1.04	1.09

Expenditure comprises the actual payments from the General Budget, the European Development Fund and the ECSC (now defunct). The 2000 data were from the adopted budget.

Source: Timothy Bainbridge, The Penguin Companion to the European Union (3^rd edition), Penguin books, 2002 (using information from the EC's The Community Budget: the facts and figures (2000).)

Statistical notes: Gross National Product (GNP) = Gross Domestic Product (GDP) + net income (investment and employment) from overseas.

Gross National Income (GNI) = GNP.

(II) Structure of revenue

The revenue based on GNI (GNP) is now the largest source of funding, followed by VAT receipts, as the table below shows. Customs duties are also an important source of revenue.

Budget revenue, 2003 (€m*)

Source	2003
Agricultural duties	1,313 (1.3%)
Levies & other duties in the sugar sector	402 (0.4%)
Customs duties	10,580 (10.2%)
VAT own resources	13,679 (13.2%)
GNI-based own resources	69,062 (66.8%)
Balance & adjustments to balances of VAT own resources from previous years	233
Balance & adjustments to balances of GNI (GNP) own resources from previous years	-233
Surplus available from previous year	5,693 (5.5%)
Other revenue	2,624 (2.5%)
Total	103,353

% GNI (GNP):
Maximum own resources which may be assigned to the budget - revenue ceiling	1.24
Own resources actually assigned to the budget	0.95

* Rounded to the nearest €m.

Source: Dick Leonard, Guide to the European Union (9^th edition), Economist, 2005, quoting data from the European Commission.

(III) Structure of spending

Expenditure on structural funds and research, industry, transport and the environment has increased rapidly since the 1970s, but spending on CAP in the early years of the 21^st century still accounted for well over 40% of total spending.

General EU budget, 2005 appropriations (2005 prices)

Sector	€m
Common Agriculture Policy	51,439 (43%)
Structural operations	42,441 (35.5%)
Internal policies (including research, industry, transport and the environment)	9,012 (7.5%)
External action (including aid and development)	5,119 (4%)
Administrative expenditure	6,185 (5%)
Reserves	446 (-)
Pre-accession aid	3,472 (3%)
Compensation	1,305 (1%)
Total	119,419

Payment appropriations required as % of GNP	1.09
Own resources ceiling as % of GNP	1.24

Source: Dick Leonard, Guide to the European Union (9^th edition), Economist, 2005, quoting data from the European Commission.

Structural Funds, which are discussed under regional policy, comprise:

The European Regional Development Fund (ERDF).
The European Social Fund (ESF).
The Guidance section of the European Agricultural Guidance and Guarantee Fund (FEOGA).
The Cohesion Fund, which was created by the Maastricht Treaty (1992) with the aim of accelerating economic convergence in the run-up to EMU.

(IV) Net contributors and net recipients

In 2003, Germany was the largest net contributor, followed by the UK (even after the rebate). Spain had the highest net receipts. The biggest net contributors in per capita terms were the Netherlands, Sweden and Germany. The biggest net beneficiaries, excluding Luxembourg which benefits from its position as a location for EU institutions, were Ireland, Portugal and Greece.

EU15 Budget 2003: net contributions

	€bn	Population (m)	€/capita
Net Contributions:
Germany	8.5	82.6	103
UK	3.8	59.3	64
Netherlands	3.0	16.2	185
France	1.8	59.7	30
Italy	1.0	57.6	17
Sweden	0.9	9.0	100
Austria	0.2	8.1	25
Denmark	0.1	5.4	19

Net Receipts:
Spain	-8.3	41.1	-202
Portugal	-3.7	10.2	-363
Greece	-3.6	10.7	-336
Ireland	-1.6	3.9	-410
Luxembourg	-0.5	0.4	-1250
Belgium	-0.5	10.3	-49
Finland	Zero	5.2	Zero

Source: HM Treasury, European Community Finances: Statement on the 2005 Budget and measures to counter fraud and mismanagement, Cm 6580, 24 June 2005, taken from Eurofacts data sheet no 10 (July 2005).

RL, February 2007