This viral post about the costs of Brexit gets a lot of things wrong

Published: 29th Aug 2019

In brief

Claim

EU Membership costs 34p per person per day.

Conclusion

Roughly correct, based on the UK’s net payment into the EU budget in 2018.

 

91p per person per day has been spent on Brexit since 2016.

 

Incorrect. This seems to be derived from an estimate that the Brexit vote reduced UK GDP growth by £66 billion in two and a half years. That is not the same as money spent on Brexit, and it is an estimate based on modelling, not a definitive sum.

 

The estimated cost of Brexit is £4.15 per person per day.

 

This seems to be based on an estimate of how much lower UK GDP could be in 2030, compared to if we remained in the EU. This is a hypothetical model for comparing possible paths: it cannot be used to accurately predict the size of the economy in 2030, or to translate the “cost" of Brexit into a definitive cash sum.

 

The estimated cost of a no deal Brexit is £5.81 per person per day.

 

This seems to be based on an estimate of how much lower UK GDP could be in 2030 if we leave with no deal, compared to if we remained in the EU. This is a hypothetical model for comparing possible paths: it cannot be used to accurately predict the size of the economy in 2030, or to translate the “cost” of Brexit into a definitive cash sum.

 

Nigel Farage has earned £541.10 per day from TV and radio since 2016.

 

Incorrect. This is a based on the outside income Mr Farage declared as an MEP between 2014 and 2018. Half of that period was before Brexit. His estimated outside earnings over that period equate to an average of £359.90-£479.50 per day, and we don’t know if all that was from broadcast deals.

Claim 1 of 5

“EU Membership: 34p per person per day.

Cost spent on Brexit since 2016: 91p per person per day.

Estimated cost of Brexit: £4.15 per person per day

Estimated cost of No Deal Brexit: £5.81 per person per day

Nigel Farage’s earnings from TV and radio since 2016: £541.10 per day”

Best for Britain, 7 July 2019

Two Facebook posts, which have been shared over 8,000 times between them, favourably compare the cost of EU membership with a number of other costs associated with Brexit.

The graphic pretty much correctly reports the cost of EU membership, but most of the calculations about the costs of Brexit are wrong or misleading.

We look at each of the claims in turn.

“EU Membership: 34p per person per day”

This is roughly correct, looking at the UK’s “net” membership fee in 2018. The UK paid £8.9 billion into the EU budget, once you subtract what it got back in rebate, and in terms of EU spending on the UK public sector.

That works out at 37p per person per day.

“Cost spent on Brexit since 2016: 91p per person per day”

91p per person per day assumes that the cost of Brexit has been around £66 billion in the three years since 2016. This might have been taken from a report by the financial services company Standard and Poor’s, which estimated the same cost in the two and a half years since the 2016 referendum. That’s a slightly different time period, but it doesn’t make a big difference to the numbers.

The graphic misrepresents what Standard and Poor’s found. It didn’t say £66 billion had been “spent” on Brexit (presumably by the government); it estimated that Brexit had cost the UK economy £66 billion in terms of lost GDP growth. This doesn’t mean the economy got £66 billion smaller—it means that UK GDP would have grown by £66 billion more had the UK not voted to leave, according to this estimate.

We can’t say for certain that £66 billion of growth has been lost. It’s an estimate based on economic modelling, which depends on making a lot of assumptions about things nobody knows for certain. We’ve written more about the caution you need to take when interpreting models.

The investment bank Goldman Sachs made a very similar estimate about the impact of the Brexit vote on UK economic growth.

In January 2019 we found that the Treasury had allocated £4.2 billion towards government departments for Brexit preparations since 2016. This is not all the money that the government plans to spend on Brexit—as some departments’ pre-existing budgets will be used for Brexit preparation too.

“Estimated cost of Brexit: £4.15 per person per day”

The above cost works out at around £100 billion per year, meaning it may well come from analysis by the National Institute of Economic and Social Research (NIESR), an independent social research institute.

In November 2018, NIESR estimated what would happen to UK GDP in a number of Brexit scenarios. The £100 billion figure relates to a scenario where the UK leaves the EU with Theresa May’s withdrawal agreement, and then signs a free trade deal compatible with that agreement.

NIESR estimated that, by 2030, UK GDP would be 3.9% lower (£100 billion lower, in 2016 prices) than if we remained in the EU.

NIESR’s estimate is roughly in line with the models of a number of other researchers. But it’s not fair to say, based on NIESR’s research, that Brexit is estimated to cost every person £4.15 a day. There are three key reasons why.

Firstly, the £4.15 per day figure in the graphic is presumably based on an estimate that UK GDP would be £100 billion smaller in 2030, compared to if we remained. The graphic seems to assume this change happens over one year, whereas it would actually be after 11-12 years.

Secondly, NIESR’s estimate was based on the UK leaving with Theresa May’s withdrawal agreement in March 2019. This didn’t happen, and it’s by no means certain that we will leave with that withdrawal agreement.

Thirdly, and most fundamentally, NIESR’s modelling is a hypothetical forecast for what might happen in the future. As NIESR says: “The estimates… are themselves uncertain as there is no historical precedent of a country leaving a major trading block such as the EU”.

This uncertainty means the research should not be used to accurately predict the size of the economy in 2030, or to translate the “cost” of Brexit into a definitive cash sum. Instead, models like this should be used to give a general sense of the expected direction of the economy over time in different scenarios.

It uses a “remain” scenario as a baseline, and then compares how much “higher” or “lower” it expects GDP to be in other alternative scenarios. This gives us a relative sense of how the UK economy might perform in each case.

But it’s important to remember that the “remain” scenario is also a hypothetical, and all are vulnerable to unexpected events. Things like global economic crises can arrive unexpectedly, meaning we can’t definitively say what the economy will look like a decade from now in any scenario.

Most models say that remaining in the EU is likely to provide stronger GDP over growth over time than any Brexit scenario. But they can’t predict the exact cost of Brexit to every man, woman and child in the UK.

“Estimated cost of No Deal Brexit: £5.81 per person per day”

The above cost works out at around £140 billion per year, so it seems to be based on NIESR’s estimate for what would happen to GDP if we left the EU with an “orderly no deal”. It estimates that GDP would grow by 5.5% (£140 billion) less than in its “remain” scenario.

For the same reasons as above, this can’t be translated into the “cost” of a no deal Brexit to every single person in the UK.

“Nigel Farage’s earnings from TV and radio since 2016: £541.10 per day”

This is probably based on Transparency International’s analysis of MEP’s declarations of outside interests. It found that Nigel Farage earned income of between €590,048 and €790,000, from activities outside of his work as an MEP, between July 2014 and July 2018. It reports his “activities” as “broadcast contracts”, although it’s unclear if every last cent was earned through media activities.

The upper estimate of €790,000 across four years works out at an average €541.10 per day.

But there are a few of problems with the post’s presentation. Firstly, it reports the earnings in pounds, when it’s actually in euros. At the time of reporting, Mr Farage’s earnings were estimated to be worth up to £700,000 across four years from 2014, which works out at £479.50 per day.

Secondly, these were Mr Farage’s earnings for a four year period beginning in July 2014, rather than from 2016 as the graphic says.

Thirdly, the calculation uses the upper estimate made by Transparency International. The group reported a range because MEPs report their financial interest in ranges (e.g. €1.001—€5.000), so it can’t be known exactly how much Mr Farage earned.

Mr Farage’s income could have been even higher than €790,000 though, because the exact value of earnings above €10,000 did not have to be specified until December 2016. Transparency International assumed all such earnings were exactly €10,000. Mr Farage had the sixth-highest earnings from outside income of all MEPs, according to Transparency International’s data.

This article is part of our work factchecking potentially false pictures, videos and stories on Facebook. You can read more about this—and find out how to report Facebook content—here. For the purposes of that scheme, we’ve rated this claim as false because most of the claims are wrong or misleading.

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