“Will the money we could save by not paying for EU membership actually represent a gain to the UK economy?”
Experts on both sides agree that the impact of leaving the EU on the UK’s economy would be much bigger than what we save on the membership fee—regardless of whether they think it would be a positive or negative impact.
Economic studies put other factors down as more important
Economists say that the money involved in our contribution to the EU budget is relatively small compared to the wider economic issues involved.
In 2014, the UK economy was worth around £1,817 billion in cash terms.
The ‘membership fee’ the government sent to the EU—even before deducting money that comes back—was an estimated £14 billion.
If after leaving the EU we wanted to keep up spending in areas that EU money currently covers, such as farming, poorer regions of the country and research grants, the saving would be around £6 billion.
So the saving would be around 0.3% of the size of the economy. Researchers at the London School of Economics recently arrived at a similar figure.
But you don’t have to agree with them to think that the membership fee is small relative to the overall costs and benefits of leaving.
A study from the Institute of Economic Affairs, arguing that the UK would actually gain from trade and less regulation by leaving the EU, says that our continued membership of the EU could cost the economy 13% of its value every year. Only a small portion of that is put down to the membership fee.
A third report by Open Europe that gives a range of possible outcomes, from good for the economy to bad, sees the membership cost as more significant in the grand scheme of things, but still only one of several factors. Trade and regulation are seen as more important.
Economic changes would affect the government’s finances far more than the membership fee savings
If the economy did suffer, it wouldn’t be much comfort that the government has made a financial saving on the membership. A weaker economy usually means the government gets less in taxes, after all.
The Institute for Fiscal Studies, a pre-eminent economic think tank which is on neither side, says “the overall fiscal consequences of withdrawal [from the EU] would be overwhelmingly driven by the effects of that decision on the wider economy”.
So if the economy is important to you in making your decision, it’s best not to focus too much on the membership fee on its own, and instead think about the impact overall. We’ve looked at the arguments about that here.
The integrity of our elections is in danger, and we need your help
You’re probably here looking for facts. Thank you for that trust. But with the EU parliament elections on the way and more elections a possibility, we need to act now to make sure our elections are protected, before it’s too late.
Could you help protect our elections by becoming a Full Fact donor?
Misinformation isn’t new, but advancements in technology mean it can spread at an unprecedented scale. Our dangerously outdated election laws have not kept up with the digital age, putting our next elections at risk of abuse.
Currently, it’s possible for a candidate to run a thousand different political ads to win the same seat, promising something different to each group it targets. At the same time, there’s no law requiring those who publish online campaigns to disclose who they are or how they are funded. The opportunity for bad actors to manipulate election results is left wide open.
You may already know about our work to make public debate online more honest and transparent. Every day, we call out the most harmful misinformation on social media platforms when and where we see it. But right now, we’re urging the government to overhaul our election laws to make sure political campaigning is held to the same level of scrutiny online as it is offline.
This work all depends on the generosity of hundreds of people who all believe that for democracy to work, we need transparency. Our monthly donors help strengthen our voice, and show our politicians that this really matters. Would you consider joining them?
Become a donor today to make sure our elections are protected.