New figures for the side of the bus

The indispensable Briefings for Britain this week has a careful analysis of the sum saved by NOT continuing to contribute to the EU since 2016.

For newer readers of this blog, the sums actually contributed were of course a major aspect of the Referendum campaign and the debate since, and the claim by Vote Leave that the UK contributed £350m a week (£18.2billion a year) to the EU budget was pasted on the side of their campaign bus. The slogan was completed by a plea to spend this money on the NHS instead. The sum was denounced as a straightforward 'lie' in furious Remain pieces,and the 'lie on the bus' is still referred to casually on things like Newsnight on the BBC. The lie was that the £350m was a gross contribution not allowing for the 'rebate' from the EU. The Treasury assured the public the net sum was a mere £8.5bn a year in 2015. That was about 10% of the total EU budget then.

O'Connell argues that allowing for the stated expansion of the EU budget, the payments agreed under the Withdrawal Agreement for things like contributions to pensions for British EU employees,and converting to present values, the authors estimate the savings from withdrawal currently to be £525 billion. This is on top of the sums agreed for pensions etc.This is just contributions, and does not consider any broader cost-benefit analysis, like any claimed boosts to trade or exports.(These are well discussed,very sceptically,  in the new book by Tombs and Gudgin mentioned last time -- Brexit The Facts Strike Back).

The piece is carefully argued, with a range of estimates according to the robustness of the data reviewed. Calculations are included of cases where the UK rebate is both increased and decreased (the latter is more likely,they think: 'The Commission proposed abolishing or radically reforming rebates as part of Own Resources reform'), and the presentation of sterling values assumes a similar rate of exchange with the euro.  However, there is  a general reliance on robust data, including the EU's own estimates of the growth of its budget, and UK Treasury and OBR [Office for Budget Responsibility] statements, and an overall high confidence in the calculations.

 Overall:

 

The fiscal saving is large in isolation. It represents real public finance resources that the UK has not had to and will not have to transfer to Brussels.

The settlement payments are small relative to the avoided contribution stream. The remaining liability of £5.3bn (nominal) is approximately 1% of the central NPV [net present value] estimate. Arguments that the ‘divorce bill’ negates the fiscal saving are numerically weak: even including the full £30.9bn HMT settlement total (including Transition Period payments) [our liability until 2065] , this represents approximately 6% of the central NPV.