EU Budget 2006: Net Contributors and Recipients

[Tender Branson]

The graphic here shows the net share of payments and revenues of all 25 EU member countries last year.

(I know the graphic is from an Austrian newspaper and in German, but I think you will be able to recognize most countries as their German names are not really different from their English names. Take it as a way of learning German ... )



For example: Niederlande (Netherlands) was the country with the highest share of net payments to the EU in 2006 with 2.589 Bio. € or 0.47% of its GDP.

Griechenland (Greece) on the other hand got more than 5 Bio. $ more back then they payed to the EU, or 2.68% of its GDP.

Now my question: Does anyone know why Ireland is still a net recipient with all it´s recent growth and development ? Its about time for them to be on the "payer" side, not on the "receiver" side ...

Anyway, it´s just peanuts we are talking about: The whole 2006 EU budget of about 110 Bio. € wasn´t even accounting for 1% of the Total EU GDP ...

+ here´s a Swedish newspaper article, complaining about the high net share Sweden had to pay in 2006 - (Sweden was second, as you can see in the graphic.)

http://www.thelocal.se/8592/20070924/

[Јas]

Now my question: Does anyone know why Ireland is still a net recipient with all it´s recent growth and development ? Its about time for them to be on the "payer" side, not on the "receiver" side ...

Now, now... there's no need to be like that.

I certainly don't know the ins and outs of Europe's finances - so I can only offer some halfway educated guesses really.

1. I'd be surprised if CAP payments aren't a major factor, it's us and the French who have benefitted most from that - though I'd note that Sarkozy has indicated he's going to move on significant reforms in this area and he seemed to receieve the backing of Ahern after they met this week in Paris. After the current decoupling regime ends in a few years time, there will be a major cut back in CAP payments heading this way anyway. If it wasn't for the recent EU enlargement the system probably could have held up for many years to come - but the sheer numbers of eligible Eastern European farmers I'm sure scared many European contributors a great deal.

2. I can't remember the terminology but the depressed regions aspect of European infrastructural funding would still coming in strong for the Border, Midland and West region (ironically the BMW region). Irish economic growth has been heavily focused in and around Dublin and its hinterland. While there has been growth in the BMW region, it hasn't been enough to lift it out of the relevant category for European investment. Again, the recent EU enlargement makes justifying any significant further investment more difficult and this line of funding is likely to wither away or at least take a very significant hit in the near future.

And that's all I've got (I think CAP and regional infrastructural development account for the vast majority of the European expenditure - but hey I could be wrong) ...maybe because everyone likes us we get it easier in these negotiations, I really don't know. I'm not complaining though...

[Tender Branson]

Now my question: Does anyone know why Ireland is still a net recipient with all it´s recent growth and development ? Its about time for them to be on the "payer" side, not on the "receiver" side ...

Now, now... there's no need to be like that.

I certainly don't know the ins and outs of Europe's finances - so I can only offer some halfway educated guesses really.

1. I'd be surprised if CAP payments aren't a major factor, it's us and the French who have benefitted most from that - though I'd note that Sarkozy has indicated he's going to move on significant reforms in this area and he seemed to receieve the backing of Ahern after they met this week in Paris. After the current decoupling regime ends in a few years time, there will be a major cut back in CAP payments heading this way anyway. If it wasn't for the recent EU enlargement the system probably could have held up for many years to come - but the sheer numbers of eligible Eastern European farmers I'm sure scared many European contributors a great deal.

2. I can't remember the terminology but the depressed regions aspect of European infrastructural funding would still coming in strong for the Border, Midland and West region (ironically the BMW region). Irish economic growth has been heavily focused in and around Dublin and its hinterland. While there has been growth in the BMW region, it hasn't been enough to lift it out of the relevant category for European investment. Again, the recent EU enlargement makes justifying any significant further investment more difficult and this line of funding is likely to wither away or at least take a very significant hit in the near future.

And that's all I've got (I think CAP and regional infrastructural development account for the vast majority of the European expenditure - but hey I could be wrong) ...maybe because everyone likes us we get it easier in these negotiations, I really don't know. I'm not complaining though...

You are right: Expenditures for the CAP accounted for 46.7% of the total 106 Bio. € budget and structural expenditures accounted for another 30.4%. The figures for Ireland were 71% and 19% and 75%/17% for France. So the EU is pouring loads of money into the French, Irish, Austrian etc. farmers hands, while most of the EU money in Belgium and Luxembourg serves bureaucracy and administration and most money in the South and new joined East is pouring into structural measures. 

On your second point: It is very likely for Ireland to become a net contributer to the EU Budget in the future as the disparity in wealth across Europe evaporates over time, except Ireland, which is still going strong due to favorable infrastructure/economic investments and immigration. While the EU helped to coddle up Ireland in the last 20 years, this trend is now reversed and Ireland is about to help coddle up the East and probably the (joining) Balkans and maaaayyybeee Turkey ... At least Ireland`s net budget receipts, measured in % of its GDP, is down from 4.4% in 1997 to 1.9% in 2000, to 1.3% in 2003 and now to 0.7% in 2006. At this pace, Ireland will probably become a net contributor by 2010 ...

http://ec.europa.eu/budget/library/publications/fin_reports/fin_report_06_en.pdf (Pages 63 and 65)

[Јas]

On your second point: It is very likely for Ireland to become a net contributer to the EU Budget in the future as the disparity in wealth across Europe evaporates over time, except Ireland, which is still going strong due to favorable infrastructure/economic investments and immigration. While the EU helped to coddle up Ireland in the last 20 years, this trend is now reversed and Ireland is about to help coddle up the East and probably the (joining) Balkans and maaaayyybeee Turkey ... At least Ireland`s net budget receipts, measured in % of its GDP, is down from 4.4% in 1997 to 1.9% in 2000, to 1.3% in 2003 and now to 0.7% in 2006. At this pace, Ireland will probably become a net contributor by 2010 ...

http://ec.europa.eu/budget/library/publications/fin_reports/fin_report_06_en.pdf (Pages 63 and 65)

I'd disagree that European structural funds are a major reason for our sustained economic growth. Certainly they're one of a large number of contributing factors, but these funds have been coming in for a long time, well before we saw any significant growth at all - heck the IMF was close to essentially declaring us bankcurpt in the late 80's.

At this stage, the Irish economy is worrying dependent on direct foreign investment - principally the big hi-tech American firms (pharmaceuticals; information & communication technologies; etc) who like our low corporate tax rates; highly educated and young workforce; english speaking; access to the EU market... Should foreign investors move elsewhere (as some evidence would indicate is an act in progress), then we could be in for a very bumpy ride.

In all honesty, though things are going really well right now, it wouldn't take a great deal to see the Irish economy crippled within a few years.

[Tender Branson]

In all honesty, though things are going really well right now, it wouldn't take a great deal to see the Irish economy crippled within a few years.

Yeah, by "crippled" you probably mean a growth of 4% instead of the 8% Ireland enjoys right now  ...

[Јas]

In all honesty, though things are going really well right now, it wouldn't take a great deal to see the Irish economy crippled within a few years.

Yeah, by "crippled" you probably mean a growth of 4% instead of the 8% Ireland enjoys right now  ...

Nope, current growth levels aren't sustainable anyway - 4% would of course be very good.
I genuinely think that a serious recession is a real possibility.

[Gustaf]

As has been said CAP payments is one part of the explanation for the unfairness in the EU system. Another is that it is paid to regions rather than countries, so countries that actively try to alleviate regional differences (like Sweden) lose out whereas others gain.

The system is really poor. The EU doesn't really need much of a budget since most of its activities are meaningless. It could easily be cut to a tenth of teh current size, at which point it wouldn't really matter how much countries had to pay.

[Јas]

As has been said CAP payments is one part of the explanation for the unfairness in the EU system. Another is that it is paid to regions rather than countries, so countries that actively try to alleviate regional differences (like Sweden) lose out whereas others gain.

The system is really poor. The EU doesn't really need much of a budget since most of its activities are meaningless. It could easily be cut to a tenth of teh current size, at which point it wouldn't really matter how much countries had to pay.

I agree with this to a large extent. Though I wouldn't describe most EU activities as "meaningless" - ehich is not to say that I necessarily approve of said activities.