Britain does not send £350m a week to Brussels
Vote Leave is not in any way a price worth paying for in exchange for fanciful notions like being able to do what we want - free from EU and global repercussions.
A favourite euro-sceptic myth is that Britain sends £350 million a week or £55 million a day to Brussels. Nigel Farage, Daniel Hannan, Priti Patel, Vote Leave and more recently Gove, Boris and others have all bandied these inaccurate figures about.
According to Her Majesty’s Treasury Report called “European Union Finances 2015”, the UK's contribution to the European Union (the ‘membership fee’ if you like) was £12.36 billion. It is calculated as a percentage of Gross National Income (GNI)
The UK received an ‘instant rebate’ of £4.86 billion. This is calculated before we make any payment at therefore the cash amount that was sent to Brussels last year was just £7.5 billion.
That is equivalent to £273 per household or £116.97 per person around 30p a day!
So starting with £7.5 billion, let’s look at some of the money that the UK gets back:
The European Social Fund which support charities across the UK with a variety of grants, and the UK Cohesion Fund that funds various infrastructure developments in the UK contribute around £1.96 billion (total of £11.8 bn between 2014 and 2020).
UK Farmers receive direct payments of just under £4 billion through the Common Agricultural Policy and Agriculture funding.
A £108 million is paid back to the UK in grants towards a number of other projects.
Therefore out of the £7.5bn we pay into the EU coffers we get back around £6bn in direct cash payments. That leaves net cash difference of £1.5 billion per year.
This is a fraction of the benefits we have got from being part of the EU’s single market. And remember that if we wanted to leave the EU but stay in the single market, like Norway, we’d most likely still have to pay a membership fee. Norway’s net payment per person is about the same as ours.
The CBI reckon that the UK could lose one hundred billion pounds from the economy and a million unemployed if we vote to leave the EU.
As EU members the UK is able to access the European Single Market which means that we are able to sell unlimited products, and services made in the UK totally free of tariffs and duties. This means that the UK can import parts and raw materials relatively cheaply keep cost of production low and it also means that UK made goods are competitively priced in the largest bloc of customers on the planet.
All this ensures that the UK a great destination for UK and foreign manufacturers to invest and create British jobs, and help build the UK economy. Without this unlimited free trade, it is unquestionable that investment in the UK economy would slow down significantly. This week’s Treasury report confirms this as do contributions from a number of other quarters such as the IMF, The Economist, Institute of Fiscal Studies and a range of others.
Take the Automotive sector, The Society of Motor Manufacturers and Traders and KPMG carried out extensive analysis of the UKs automotive sector. Their conclusions from the final report entitled “An economic assessment of the UKs automotive industry with the European Union” are that over 700,000 people in Britain are employed in the automotive sector, and the total contribution to the UK economy is in excess of £60 billion in 2013/14. One example is Nissan in Sunderland who build 500,000 cars per year only sell 19% of their production in the UK. A conservative estimate therefore would be that our automotive sector makes cars in the UK for the EU market of around £36.3 billion p.a.
According to the Association of British Travel Agents (ABTA) report in conjunction with Deloittes, inward travel on business from other EU countries £0.95 bn per year. (Not tourists, just business).
The UK Agri-Food sector employs over 3.5 million people in the UK and contributes over £103 billion in Gross Value Added to the UK economy in 2013. Of this a significant proportion is exported all around the globe – a conservative estimate of £70.15 bn per year.
TheCityUK report “A practitioners guide to Brexit: exploring its consequences and alternatives to EU membership suggests that the UK financial and related services sector employs 2.2m people in the UK and of a total GDP contribution to UK GDP of £66 bn in 2014/15. Exports to other EU countries from this sector were far in excess of the £19.7 bn per year figure I am using.
Therefore just between those 4 sectors alone UK’s GDP is enhanced by £127.1 billion each year.
Remember the UK’s NET cash contribution to the EU is just £1.5 billion, but the benefits to the UK economy from those four sectors alone is £127.1 billion.
By any standard that is a good return on the money we spend!
But it does not end there
As a result of the UKs membership of the EU, we hold over one trillion pounds of money in UK bank deposits from the other 27 EU countries – it is impossible to think that they would leave all that here if we vote to Leave.
Obviously if we left the EU then some of this business will go away. So assuming the other countries would take say just 17% of that figure out of the country – that would be a loss of £170 billion out of the UK banking sector.
A figure equivalent to half the amount that UK Government spent in bailing out the banks back in 2009).
Furthermore the UK in 2014 received £1,065 billion of foreign investment into the UK economy from countries all around the world. A large portion of this is to build products in the UK to sell tariff free into the EU. This is a significant reason for the UK to remain members of the EU.
Of course it is unreasonable to think that we would not lose all that investment should the UK be outside the EU, but let’s say that other EU countries stopped investing 40% of this investment in the UK and put that money to use elsewhere in the EU, that would be loss of around £170.1 billion out of the UK economy. If other countries around the world reduced their inward investment into the UK by 25%, that is further loss to the UK economy of another £150 billion.
So the UK pays net £1.5 billion a year and in return our economy benefits to a figure approaching £450 billion.
On top of all this a range of economic, financial, industrial and trading organisations are estimating that anything between 1.5 million to 4 million jobs in the UK is reliant on our EU membership. This is quite feasible because the financial services sector employ 2.2m, the Agri-Foods sector 3.5m and the automotive industry 700,000.Whichever way UK’s membership of the EU is analysed to Vote Leave is not in any way a price worth paying for some fanciful notions like being able to do what we want free from EU and global interference.