Press Release, 27th June 2007

EU system of grant-giving hinders development in UK’s poorest regions

In a new paper for Global Vision, Dr John Meadowcroft argues that the EU system of grant–giving hinders rather than helps economic development in the UK.

The UK receives £5.7 billion annually in grants from the EU to promote development and economic growth in some of the most deprived regions of the country. The UK also contributes around £12 ½ to £13 billion to the EU’s budget every year.

The money that the UK receives in grants from the EU is not simply a ‘gift’ from the Commission or the other Member States. Rather, it is a partial repayment of the billions of pounds that the UK contributes to the EU each year. These funds are extracted as taxes and duties from profitable businesses, but are then largely repaid as grants to unproven or unprofitable enterprises.

Dr Meadowcroft argues that economic development in the poorer regions of the UK should not come from EU grants to businesses or industries that are failing or to new enterprises unable to attract commercial investment. That was the policy followed by the UK government in the 1960s and 1970s that led to deep economic recession in many parts of the UK – something from which many regions have never truly recovered.

Instead of channelling money from the UK through the EU and back again to enterprises that are failing or have no proven track record of success, funds would be best left in the hands of successful and profitable British business and industry.

The author commented, “People often assume access to EU grants are one of the benefits of our membership of the EU. Nothing could be further from the truth. EU grants are in fact a drain on the economy, misdirecting resources away from proven, profitable enterprises to unproven and very often unsustainable endeavours.”