Wales’ net benefit from the EU budget estimated at around £79 per head

A new report released today (Tuesday 24 May 2016) shows that Wales receives £245 million more from the European Union than it pays in. The overall net benefit to Wales was around £79 per head in 2014.

The briefing paper finds that the amount of money Wales received from the EU budget in 2014 totalled £658m, while Wales’ contribution to the EU (after accounting for a share of the UK’s rebate) stood at £414m. This net benefit of £245m was equal to around 0.4% of GDP in 2014.

The report, Wales and the EU Referendum: Estimating Wales’ Net Contribution to the European Union, is published by Cardiff University’s Wales Governance Centre as part of its ongoing research projects in public finance and the impact of the European referendum in Wales.

The work compares Wales’ receipts from the EU against an estimate of Wales’ contribution to the EU budget. This figure does not reflect the wider economic or trade considerations relating to membership of the Single Market. The analysis indicates that Wales’ position in terms of its net contribution to the EU differs substantially from that of the rest of the UK.

In their report, the authors find that:

• The estimated net benefit from the EU for Wales in 2014 was around £245 million. This was equal to around 0.4% of Welsh GDP.
• The UK as a whole made a net contribution of £9.8 billion in the same year.
• Wales’ net benefit from the EU equated to around £79 per head in 2014. This compares with a net contribution of £151 per head for the UK as a whole.

The cost or benefit of EU membership to the UK’s public finances is a key topic of debate ahead of the referendum on 23 June 2016. Differing arguments over the magnitude of Britain’s net contribution to the European Union have been central to the arguments put forward by both designated campaign groups for the upcoming referendum.

The accuracy of some assertions relating to the UK’s net contribution has been repeatedly challenged, particularly with regards to the treatment of the UK budget rebate.  Many have also acknowledged that the picture is different for the individual countries and regions of the UK compared with the UK as a whole, especially given the regional dimension of a significant portion of EU funding.

Ed Poole of the Wales Governance Centre at Cardiff University and one of the authors of the report said: “The analysis shows the potential for significantly different impacts across the UK of withdrawal from the European Union. Wales’ position contrasts very significantly to that of Scotland or England in being a net beneficiary of funds, primarily due to Wales’ receipt of significant funding from the EU’s regional and agricultural programmes.

“It has been variously argued that monies saved from EU budget contributions could be spent on replacing funding from EU programmes that benefit Wales. However, there is no guarantee that any fiscal space created in withdrawing from the EU would not be used instead for other UK government priorities such as tax cuts or debt reduction.”

Guto Ifan, also of the Wales Governance Centre at Cardiff University added: “In the forthcoming referendum debate, the distinct position of Wales with respect to its relationship with the European Union needs to be more widely recognised and debated.

“Beyond the wider economic benefits and costs of EU membership, Wales’ position as a net beneficiary from the EU means the outcome of the vote may have a marked effect on the future economy and public finances of Wales.”