PLACE OF UNITED KINGDOM (UK) IN THE EU BUDGET

Abstract

One of the main arguments regarding the referendum which had been result with the decision of
leaving the EU membership in 2016 is that financing the European Union (EU) budget is a great
burden on the United Kingdom (UK) economy. This argument is not an idea which was only
brought before or after the 2016 referendum, it had been expressed by certain environments since
1973 when UK became a member of the EU. Especially, there had been intense negotiations of UK
political authorities with the related institutions of the EU about budget beginning from absolute
membership. It is known that Margaret Thatcher who became Prime Minister of UK in 1979 made
intense negotiations in budget discussions. In this context, developments between UK and the EU
are analyzed in the paper on the axis of the budget through the analysis of the reports prepared by
EU Commission. According to the results of the review, the UK’s position among other members as
one of the four main contributors to the EU budget is a natural result of the EU budget income
mechanism and the UK’s wider economic size compared to other members. The UK’s contribution
to the budget had been decreased by creating a “UK correction mechanism” in 1984 financed via
other members in the mechanism available as a result of UK negotiations. In the period of 1999-
2018; the year which reflects the largest gap between UK contributions and expenditures transferred
to the UK from the budget is 2015 and the amount is 13.9 billion Euros that is 0.55% of UK’s 2015
GDP value. The ongoing negotiations between UK and EU since 1984 appears to be the most
important economic reason which causes Brexit result. It is certain that new structural process
which will occur in the EU budget after Brexit will cause revenue decreases of some member
countries acquired from the budget. On the other hand; there will be some financial advantages in
terms of UK as a result of contributions transferred to the EU budget will remain in the economy.