Is Our EU Membership Money Going to be Missed?

A twitter exchange triggered this latest analysis. The UK contributed €12 billion to EU Membership. Will this money be missed by the EU?

As the UK approaches Brexit negotiations at the end of the month, the UK government following through with it, is starting to position itself in the mainstream UK news. With Philip Hammond on BBC and Peston in one week, and the question of EU and UK residents still unclear, the positioning is definitely starting to play out.

Jolyon Maugham QC’s feed is full of interesting discussion. If you’re not familiar, Mr Maugham is attempting a case in the European Courts of Justice to determine if Theresa May has the ability to reverse Article 50. However, in haste today, I dumped an image and it left me thinking I probably should have explained myself better.

UK Contributions to the Egg basket

The question of what happens to our contributions is quite an interesting one for numbers geeks like me. The results of this are not very clear cut. So picking up the high level numbers to play with, we can crunch them and find out what the net effect is of the UK leaving the EU, on the EU membership contribution.

At the moment, the EU runs a budget surplus of €4.4 billion. The UK is a net contributor to the EU budget by just shy of €7.08 billion. The loss of UK contributions would yield a net loss of €2.7 billion, or a loss equivalent to 2% of EU income.

contributions of EU-27 once the UK has left

Where could this 2% come from? This is quite a big loss, right? Not so fast…

Not the Whole Story

EU income comes from three different sources, which together make up 98% of revenue.

  1. Traditional Own Resources (TOR) — Customs duties on imports from outside the EU
  2. VAT
  3. Percentage of GNI

The UK exports £300 billion of trade to the EU every year. It also imports £500 billion too, which gives us our trade deficit of £200 billion. The effect of a 10% tariff on either side would mean imports costing £550 billion and exports £330 billion, resulting in an annual trade deficit of £220 billion, instantly increasing the cost to the UK economy of £20 billion every year (€23.13 billion), which falls under the auspices of TOR in the above list. This wipes out the €7.08 billion the UK is saving on the membership fee and costs us another €16.05 billion (~£13 billion) more.

Hence, and here’s the key message of the above math, the UK leaving the EU and trading with it on WTO terms is an excellent result for the EU!


As I have always ranted at Brexiteers, all aspects of European Union reasoning have to consider it systemically, in context. Whilst did a good job of tackling the issues individually, It isn’t enough to do so, since the problems are non-linear and the behaviour of such mutually interacting factors has to be understood. International economic systems are interlinked, especially in open economies like ours. We cannot live in isolation, especially since we are not self-sufficient. This means we have to consider the effect of other facets of the UK economy and trade to get a more holistic picture.

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