The CAP can cope with a Brexit

Posted on

A Brexit would not be a serious blow for the CAP from a budgetary point of view, taking into account the British rebate and the return on contributions level: the CAP is the policy area to which the UK is the least net contributor. The impact of a Brexit would be first and foremost concentrated on the UKs farming sector and on trade with many uncertainties as underlined in many reports. 

The UK is an important contributor to the overall EU budget, but it’s less the case when it comes to the Common Agricultural Policy. It supplies 10,5% of the global EU budget, but a more precise analysis shows that it provides only 5% of the CAP headings.

In 2014, the UK contribution was €14.1 billion after the deduction of the UK rebate (€6 billion), while EU spending in the UK totaled €7 billion: the UK was thus a net contributor, to the sum of €7.1 billion.

Nevertheless, to understand more specifically the impact of a Brexit on the CAP headings within the overall EU budget, it is necessary to go back to the drivers of the negotiations of the Multiannual Financial Framework, thus analyzing the position of each Member State, when it comes to every single policy.

The negotiating priorities of the different Member States in relation to the distribution of the EU budget, between the Union’s main policy areas, can be read, to a large extent, as a consequence of the specific performance, the so-called “ return on contributions” of each policy area compared with the Member State’s overall performance.

This helps drawing the real UK footprint on the EU budget, and the implications of the possible absence of a UK contribution in a post Brexit context – implications at financial ministers level, for the CAP.

The UK’s performance within the CAP stands at 0.57 cents. This means that the UK received 0.57 euros for 1 Euro paid in – which is much better than other policy areas : overall, if we take all the EU spending, the UK receive roughly 0.39 cent for 1 Euro paid in, mainly because of Regional policy (structural funds).

Taking 2013 as a baseline, UK received €3,9 billion via the CAP and contributed to the CAP for €6,8 billion.

This means that in financial terms, the overall impact of a Brexit on the CAP budget would be limited to less than 5% of the CAP budget – or around €2.9 billion per year.

This 5% would be balanced politically in case of a post-Brexit financial negotiation, knowing that the UK government has traditionally been the main advocate in the net contributors group of countries, which are reluctant to maintain the CAP budget.

More elements on the cost-effectiveness of the CAP can be found here.