SINCE JOINING THE European Economic Community (EEC) on 1 January, 1973, Ireland has undergone huge social and economic change as a country.
In 1973, Ireland was a predominantly agricultural-based economy, with a population of just under 3 million people. The country relied heavily on the UK for trade, and an average house cost about €9,000.
Today, according to the latest Census, the population stands at about 5.1 million people. The country has gone from being one of the poorer countries in Europe to one of the richest. The economy has transformed from agriculture to services and foreign exports, and has become a European hub for international tech companies.
Life expectancy and Gross Domestic Product (GDP) have shot up, along with house prices and, in recent times, the cost of living. In 1973, the Gross Domestic Product (GDP) of the country – which is the total value of goods produced and services provided during a single year – was £21,389 million. In 2020, Ireland’s GDP was €372,869 million.
Much of this transformation has to do with Ireland’s membership of the EU, and the funding it has received. Between 1973 and 2018, Ireland was a net recipient of over €40 billion in EU funds.
This money was divided between major infrastructural projects, social funds, job creation initiatives and other measures and served to change the Irish economy, and as a result, the country in general.
How EU funding works
EU funding is controlled and distributed by the European Commission – the executive branch of the EU.
There are currently 27 member states of the European Union, each of which receives some level of funding every year. The EU is divided into countries that are net receivers or net contributors of EU funds.
Contributions to the budget are based on a country’s economy, with richer countries paying more. Germany, the bloc’s biggest economy, contributed €28 billion to the EU’s budget in 2020. Prior to Brexit, the UK was one of the biggest contributors to the budget, one of the facts that led to the referendum taking place in 2016.
For over 40 years, Ireland was a net receiver of EU money, with billions of euro going to large-scale investment projects and regional initiatives, which rapidly brought the country into modernity.
Much of this money was spent on road building throughout the ’80s and ’90s, with EU funds helping to construct, for example, the M1 and M4 between Dublin and Galway and the M1 and M9 between Kilcullen and Waterford. The M50 was also part-financed by EU money, as was the Port Tunnel and the Luas.
Since 2014, however, Ireland has become a net contributor to the EU budget. According to the European Court of Auditors (ECA) annual report on EU expenditure in 2020, Ireland’s net contribution to the EU from 2018-2020 was €377 million.
Where the money goes
Depending on the particular type, funding to EU countries can either be managed directly by the European Commission, jointly between the European Commission and national authorities, or indirectly by other bodies inside or outside the EU.
Directly-managed funding breaks down into grants and contracts, and is run through a tenders portal. Grants are awarded for projects that generally take place in countries but relate to wider EU policies. Contracts are awarded by EU institutions for various works that they need for their operations.
That vast majority of money from the EU is jointly managed by the European Commission and national or regional authorities. About 80% of the EU budget falls into this category, and these projects mostly fall under the European Structural and Investment Funds (ESIF).
In Ireland, there are four funds that fall under the heading of the ESIF. These are:
In response to a set of queries from The Journal, spokespeople from the different funding streams gave a breakdown of budget spends and projects financed over the years, as well as the amount of money that will be spent in the coming years.
According to the European Commission website, the European Regional Development Fund (ERDF) is designed to correct imbalances between the regions of the EU; the European Social Fund (ESF) provides money that aims to improve job prospects for people and create a more inclusive society; while the other two streams relate to supporting rural development and sustainable fishing policies.
From 2014 to 2020 Ireland was allocated just under €1.2 billion in funding under these headings, with the majority (€545 million) going to the ESF.
In Ireland, all this money goes to a wide variety of projects. These include providing training places for unemployed people, supporting small businesses, protecting the environment and natural habitats, supporting fishing communities, among others.
For the period of 2021 to 2017, Ireland is set to receive about €1.3 billion in similar funding, Again, the majority (€508 million) will go to the ESF.
The future of funding
Over the coming years, Ireland’s gross contribution to the EU is expected to grow. Under the latest seven-year plan for regulating the EU’s budget – known as the Multiannual Financial Framework (MFF) – Ireland will contribute an average of about €3.5 billion per year to the EU.
In response to a Parliamentary Question last year from Fianna Fáil’s Éamon Ó Cúiv, Finance Minister Paschal Donohoe said that Ireland’s receipts (ie, the funding received from the EU) in total between 2021 and 2027 that period will be about €2 billion per year.
While this is less than the country contributes, Donohoe said:
“Looking at EU Budget contributions in net terms fails to capture the wider benefits to Ireland of our membership of the European Union.
“For example, the European Commission has previously estimated the benefits to Ireland of the Single Market at over €30 billion and close to 10% of Gross National Income (GNI).
Although Ireland is a net contributor to the EU budget, many sectors of Irish society continue to benefit directly and indirectly from the breadth of EU programmes funded by the budget.
As well as the established funding streams, Ireland is also set to get an estimated €915 million from the EU’s Covid recovery fund, and over €1 billion from a fund to help tackle the negative effects of Brexit. The country is also set to receive up to €84.5 million from a Just Transition Fund, aimed at helping at-risk communities in the shift away from fossil fuels.
Some TDs have been critical that Ireland is giving too much to the EU, and not getting enough in return. In relation to the Brexit funding, Aontú TD Peadar Tóibín, said that it wasn’t nearly enough:
“The Irish government swore that after the EU budget deal, Ireland would be top of the queue in terms of receiving funding,” he said.
“It is unquestionable that Ireland is the most vulnerable to Brexit by a country mile, the allocation of funding certainly does not reflect that fact.”
This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work are the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here.
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