What does leaving the EU mean for public finances?
28th Jun 2016
The UK’s net contribution to the EU is one of four areas where the UK’s decision to leave the EU has the most obvious economic impact, according to the House of Commons Library.
The UK would “save” this when we leave—though if we want the same level of access to the single market we may be required to make a continuing contribution, as Norway and Switzerland do.
But, as the Institute for Fiscal Studies and others pointed out before the vote, the performance of the economy, and how much we can raise in tax, have a much bigger influence on the state of public finances. This also determines how much we have to spend on public services like the NHS.
The response so far suggests “a weaker expected economic outlook at home and abroad”, according to the National Institute for Economic and Social Research. The next official forecast is due in the autumn when the Office for Budget Responsibility sets out its view.
We will also have to consider whether we want to continue funding the areas of the UK that the EU has been spending money on. This has included poorer areas, agriculture and research (with the latter funded separately to the £4.5 billion).