The EU Costs Britain £150 billion a year

Professor Tim Congdon

There have been many estimates of the annual cost of Britain’s EU membership.  It is of course a great deal more than merely our direct annual budget contributions, of around £20 billion gross.  The biggest single element is the cost of unnecessary and onerous EU legislation, but there is more besides.  In the past I have erred on the cautious side, and tended to quote a figure of “over £100 billion”.

So I am delighted to find that Professor Tim Congdon has produced a very thorough, substantial and well-researched study, which shows that my figure was cautious indeed.  It makes very alarming reading.  He puts the total figure at £150 billion, or in round terms 10% of GDP.  At a time when we’re talking about “austerity”, and planning to cut vital services including the armed forces and the police, we are doing so with one arm tied behind our backs.

Think of the transformation if we cut loose from this massive burden.  We might allocate (say) half of the proceeds to debt repayment, and the other half to tax reductions and vital services.  Such a policy would transform our economy, and set us on the road to recovery and prosperity.  And all it takes is the will to make it happen.

Tim Congdon is, of course, one of the UK’s most distinguished economists.  We had the privilege of hearing him speak over the weekend at the UKIP Conference in Birmingham, where he shared a panel with Capital Economics’ Roger Bootle.  In the 1990s, Tim was one of the “wise men” — the Treasury’s Independent Forecasters, and an adviser to the Conservative government.  He is now UKIP’s Economics Spokesman.

The study  finds that the direct fiscal costs of membership come in at around 1% of GDP; regulatory costs at 5%.  Costs of resource misallocation, including the CAP impact, he puts at 3¼%.  Miscellaneous smaller items, including the cost of jobs lost to EU immigrants; the cost of waste, fraud and corruption (including the CFP); and contingent liabilities including benefit tourism, take the total to a whopping 10%.

And what about the offsetting benefits of EU membership?  The economic impact of free trade in the EU, for example?  But of course many countries around the world, including Korea, Mexico, Norway and Switzerland enjoy free-trade access to the EU.  India is just negotiating an EU free trade deal.  As the EU’s largest trading partner, and a huge net customer of the EU, it is inconceivable that we in the UK should not also enjoy free trade terms when we leave the Brussels Empire.  There are few if any benefits of EU membership that could not be achieved through a simple free-trade agreement, which would also offer us the benefits of independence, freedom and self-determination.

As we struggle to break free of a stubborn economic recession, we can ill afford the EU’s massive drain on our resources.  To recover, we must first break free from the EU.

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10 Responses to The EU Costs Britain £150 billion a year

  1. neil craig says:

    10% of GDP would be over £160 bn. Also Commissioiner Berhugen gave 5.5% not 5% as the proportion of GDP lost to regulation. This is not to say thar Congdon has underestinered the cost, since there are argualble cases the other way, but that he has not gone out of his way (as for example Sterns did) to estimate high at all points and thus that his figure is credible (whereas Sterns & many other government ones aren’t).

  2. Andrew Shakespeare says:

    Roger, do you happen to know roughly what £150 billion equates to per household? Knowing what each family is shelling out for this monster, and what we’re having to sacrifice in order to do so, makes figures like £150 billion real.

    My other question is why do YOU think Cameron, Clegg and Miliband are all so united in their determination to uphold and extend the EU’s grip? It all seems so unarguable that their position simply baffles me. It’s not even as if any of them seem to have any decent argument in the EU’s favour, preferring to prattle vaguely about the EU’s manifest benefits (they’re certainly not manifest to me!). But surely, in their private moments, they must ask themselves, “What on earth are we doing this for?” As one who knows rather more about the inner workings of government than I do, what do you think is their reason?

  3. I see nothing in this article that shows what the income to the UK from the EU is per annum. It also talks about the free trade both within the EU and with countries that are not…but again no figures. While one expects bias against membership of the EU from UKIP it would be better served by showing both sides of the equation.

    • In that case, Andy, you haven’t read it. Please re-read the penultimate paragraph

      • Oh but I have read it Roger and now I have re-read it but I still don’t see any pound or euro signs. Where are they? If you simply state membership is costing £150 billion is that before or after adjusting for income from the EU? The financial issues in relation to membership of the EU do not revolve solely around free trade agreements, do they?

  4. Phil Richmond says:

    Andy – there are no benefits the other way that we couldnt get anyway whether we are a member or not.
    Everything written above is completely correct. I work for a global French company and thanks to the EU our sales in the Eurozone are dangerously on the slide. However thanks to Asia/Russia & South America we are nicely in the black.
    The EU is an economic corpse which is dragging us all down. If you cant see that then you must be in the public sector and/or a Lib Dem.

    • Phil Richmond – I did not say that what was written in the article was either correct or incorrect. I was pointing out that the figure of £150 billion as quoted did not clarify whether it was a gross or net figure. I also pointed out that, contrary to what the article seems to infer, the financial issues surrounding membership are not simply a matter of free trade agreements.

      Your statement that if I “cannot see that “the EU… is dragging us all down” I must be in the public sector and/or a Lib Dem is an impertinent assumption. I have said nothing to indicate that I believe if this is or is not the case. and, given that you are so wrong in your assumption I feel justified in wondering whether your analysis of your company sales position is equally questionable.

  5. Duyfken says:

    Sympathetic to these views, I am yet disconcerted by the comments of the Polish Foreign Minister, Radek Sikorskis; these may be read at: http://www.msz.gov.pl/gallery/BRP/201209/20120925TIMES/7_EU_myths.pdf . How do these marry with the estimates provided by Prof. congdon?

  6. mikestallard says:

    OK so he is probably right.
    What he is really saying is that it is time to free ourselves from distant, often corrupt (yes), often arrogant foreign domination.
    I agree!
    But the real question is how do we set about it?

  7. Pingback: “Europe” doesn’t Work – The Libertarian Press

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