Why has the UK been handed a massive £1.7bn bill from the EU?

Believe it or not, there are downsides to an improved economy – something the UK has just found out.

We’ve been handed a bill for €2.1bn (£1.7bn) from the EU because our economy is better than we thought it would be at this point.

Huh?

The EU’s budget is made up of contributions from each member state. Those who are more able to pay contribute more. For example, Germany is typically the biggest contributor, often followed by France. However, per person, Luxembourg usually pays the most, as it is the richest country per capita.

Here’s a graph of what each country contributed in 2013:

EU contributions 2013

Why are people annoyed at this? Isn’t it only fair if we’ve got more money swishing around?

Firstly, many people would argue that we do not have that much more money in the economy. In September, the government changed the way it calculated GDP to include illegal drugs and prostitution, among other items. The government was pleased to see £65bn added to our GDP by this change, meaning our economy was almost 5% bigger than we thought it was.

However, it means we have to stump up £1.7bn on top of the £8.6bn we’ve already paid this year, by 1 December.

The Netherlands is in a similar position to us, having performed better than it predicted, while countries such as Germany and France, which have done much worse, will get money back.

Patrizio Fiorilli, a European Commission spokesman, told the BBC the additional request for funds “reflects an increase in wealth”.

“Just as in Britain you pay more to the Inland Revenue if your earnings go up,” he said.

Outrage

Conservative MEP Syed Kamall told BBC Radio 4’s Today programme: “The European Commission is penalising Britain for taking tough decisions, putting in place a long-term economic plan and for having the most successful economy in the EU, while actually rewarding France for being an economic basket case.

“David Cameron is absolutely right to stand up to this attempted daylight robbery by the EU.

“This is outrageous and harms the EU’s relationship with Britain. At times like this, the European Commission can be its own worst enemy.”

Now read:

Readers' comments (2)

  • Including drugs and prostitution in GDP is obviously a feeble attempt to lie to the public about the true state of the economy. It has backfired spectacularly and cost us £1.7bn with no real increase in GDP at all. Cameron and Osborne are the most inept economists that have ever been let loose on our economy. Thank God we've got the chance to get rid of them next year.

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  • £65billion on drugs and prostitution. That's some party ! How come I missed it ?

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