IRELAND MAY HAVE to pay an extra €280 million in our contribution to the annual EU budget next year, after the 26% GDP growth recorded in 2015 and published earlier this month.
Fianna Fáil TD Robert Troy raised concerns over this in the Dáil late last week, during Leaders’ Questions.
In response, Tánaiste Frances Fitzgerald claimed that Ireland had been a “net beneficiary” from the EU, to the tune of more than €40 billion.
Esther, a reader in Wicklow town, asked us to check the veracity of this number, so we did.
(Remember, if you hear statistics that cause you to raise your eyebrows, email factcheck@thejournal.ie or tweet @TJ_FactCheck).
Claim: Ireland has been a net beneficiary from the EU, in the order of more than €40 billion
Verdict: TRUE
What was said:
During her remarks on the GDP figures and the possible €280 million extra contribution, the Tánaiste claimed:
…One of the points I would have to make is that all member states, including Ireland, benefit from the programmes funded through the EU budget.
And Ireland is, in fact, a net beneficiary in the order of over €40 billion, from the EU, over the years.
You can watch the exchange in full here (starts 11.15), or read the transcript here.
We asked the Department of Justice for evidence to support the Tánaiste’s claim, and they sent us figures from the Department of Finance outlining Ireland’s contribution to, and revenue from, the annual EU budget from 1973-2015.
In total, we have put in just over €32 billion, and received around €74.5 billion. Our net revenue from EU budgets since 1973 has been exactly €42,431,900,000.
For the pre-Euro era, these figures have been converted from punt using the 1:1.2697 exchange rate. There is no adjustment for inflation, so the “net present value” (accounting for inflation) would actually be significantly higher than €42.4 billion.
As you can see, 2013, 2014 and 2015 are the first years on record that we have paid more into the EU budget than we have received from it.
We “did best” from the EU annual budget in 1997, when we got €3.2 billion in spending, but contributed just €652 million – a net gain of €2.5 billion.
Interestingly, 79% of EU spending in Ireland was in the form of Common Agriculture Policy (CAP) funding, in 2014.
However, a note to the Department of Finance data points out that their figures “may differ in some instances to European Commission published figures”.
So we asked the European Commission for their numbers, and here’s what we found:
As you can see, the net gain between 1976 and 2015 was €44,635,100,000, but the total net revenue since we joined in 1973 is likely to be slightly higher than that.
Comprehensive figures for revenue to each member state are not available for 1973-1975, but we know that Ireland’s contribution was very small in those years, and we had a net gain every year until 2009.
And, as was the case for the Department of Finance figures, there has been no adjustment for inflation. The net present value of Ireland’s gain from EU budgets would be much higher than €44.6 billion.
According to the EC figures, Ireland has only had a net loss from the EU budget in two out of the last 40 years – 2009 and 2014.
Health warning
As some of you may have already noticed, these figures don’t take into account the biggest ever single transfer of funding between the EU and Ireland, as part of the Troika bailout.
This is an extremely complicated set of transactions, and it is almost impossible to calculate simply what the net gain or cost is to Ireland.
As pointed out to FactCheck by the economist and Senior Lecturer at the University of Limerick, Stephen Kinsella, former Central Bank Governor Patrick Honohan estimated the cost of the bank guarantee as being around €40 billion.
In his testimony to the Banking Inquiry last year, he said:
The best estimate is around €40 billion in terms of net long-term costs, taking account of the recoverable amounts, the amounts paid in guarantee fees, the amounts of recoverable in terms of when the Government sells shares in banks.
…However, there are so many “ifs and buts” that we could spend the whole morning on it.
Michael Tutty, a member of the Irish Fiscal Advisory Council and former Vice-President of the European Central Bank, told FactCheck there was “no single simple answer”, but offered this assessment:
In one sense, the net cost of the EU bailout funds is the real value of the repayments and interest, taking account of inflation and the time value of money, which we give to the EU, less the money which they have given us.
But if the EU did not lend us the funds, we would have had to borrow them elsewhere at what would undoubtedly have been a much higher rate of interest and probably shorter maturities, if indeed funds were available to us from anywhere at that time.
Taking that into account, the EU funding probably gives us a net benefit rather than a liability.
For the purposes of this FactCheck, we have treated the question of the bailout as a moot point.
It has obviously been a hugely important episode and involved a series of very significant transactions. But finding a neat breakdown of its benefits and liabilities to Ireland is way beyond the scope of this article.
Furthermore, given the evidence provided by the Department of Justice in response to our queries, it is clear that the Tánaiste was speaking in terms of Ireland’s net gain from EU budgets, which is typically how members states measure their financial gain/loss from membership of the EU.
And on that measure, the Department of Finance and European Commission figures yielded a €42.4 billion and €44.6 billion net gain, respectively.
For this reason, while bearing in mind that important disclaimer regarding the bailout, we rate Frances Fitzgerald’s claim TRUE.
To download a spreadsheet containing all the relevant data, and technical notes, click here.
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