8. The Elephant in the Brexit Room (TEITBR) - Finances

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(A work in progress)
Its now been the better part of 3 years, and we are in a worse mess than we were before. Mainly due to politicians trying to engineer a Remain.
One of the primary arguments against leaving, is the damage it will do to the Uk finances.  In order to actually ascertain this, we have an attempt to break this all down, using information to hand, where possible, supplied by the actual organisations.

The finances are complex, so I shall attempt to break them down here, as simply as possible. During this research it has transpired that not only is the EU a major contributor to our woes, but so have been decades of politicians either not understanding, or wilfully taking part in this.

The major elements of EU/UK financials are:

1. The EU Membership fee 
2. The balance of trade between the UK and other EU countries
3. The 'joint' operations.
4. How does the Uk pay for this

1. EU Membership fee
The EU membership fee is largely based on GDP of a country, and varies from year, depending on the previous years figures. The below figures show what we have paid since 1973. This is expected to increase if we remain.
 

In 2017, the figure was decided by the following: 

Proposed contribution    £ 18.6 bn   (the 'magic' £350m per week)
Less the Uk Rebate:       £   5.6 bn
Sub-Total:                       £ 13.0 bn
Less:                               £   4.0 bn EU payment to Public Sector
Total paid to the EU      £   9.0 bn
There is also an amount in research grants, £1.5 Bn in 2015. Have been unable to find the 2017 figure, but even if £2 Bn, that equates to £7 Bn paid net, or £134.5m per week. This equates to 1.75* the amount we receive back, so could easily afford to keep those payments up in the future.

How is GDP measured?
The Uk measures GDP in 3 ways:
- The sum value of goods and services provided minus the sum value of imports at the point of final payment by or to the consumer. 
- Money earned through wages and profits
- The value of goods and services produced.

For EU fee determination, the GDP measurement is based on the Qtr to Qtr method, a join on all 3 of the above.
This graph shows the variances (changes)  from 1955 to 2019:

Ignoring 2008, which was a westernised global fallout, except that EU membership was supposed to help flatten out these issues. This shows that since the early 1990s, when 'further political integration' started, our GDP 'growth' has fallen from ~2.5% per qtr to  ~0.75% per qtr. At the same time as our 'contribution' has increased.
The 2017 figures can be seen here, and these are the comparisons with 2015/16

The Uk contributions for 2010-2016 are here:

These figures show a disjoint between what we should pay, and what we are paying, which is a sub-optimal place to be.

A further caveat with GDP is that while it includes 'wages and profits', as well as inward investment, with the case of foreign companies setting up in the Uk, the 'inward investment' will be offset against tax, the wages will contribute to GDP (increasing our fee to the EU), but the profits will be repatriated to the country of origin, decreasing the taxes we would have had, to pay the extra EU fees.

2. Balance of  Trade
Trade, the whole main selling point if the EEC/EU is more interesting. There has been much said about the 'benefits' of our trade with the EU, but little actual proof of why, and how.

Lets look at Uk alone. This is the balance of Trade in Goods and Services from 1948 - 2017

Understanding that the net effect of Exports (Sales) - Imports (Costs) is how a country actually makes its income. There are those that will debunk this, by saying 'Inward Investment' is  also  a factor in this equation. It is, but it is 'investment' which always expects a return. For a short term, a negative balance, made positive by 'Inward Investment' is valid, however on a longer term it is not.

As the above figures show, from 1948 the Uk essentially broke even over time. However, since 1973/5 we have had an ever decreasing balance of trade.   

Further, looking at these figures for trade as a %age of GDP over  the same period:

We can see, looking at the middle and bottom lines, that since the mid 70s we have been making small losses, and these losses increased from the mid 90s in percentage terms.

We can also look at the actual figures for UK Trade from 1991- 2017, for Goods and Services:

This shows exports grew from £ 141,882m to £ 615,910m. This is where the EU contribution is measured. What is not measured is the imports that grew from
£ 144,500m £ 641,796m. Trade as a %age of GDP grew from 41% -62%, which again increases our 'contribution', while ignoring the fact we are actually making a loss.

Trade with the EU for 2017/18 showed the following:

This is intra and extra EU trade, imports and exports for Jan - Oct 2018 compared to the same figures for 2017. The Uk trade balance was -128bn Euros. Total year would have been ~140bn Euros. The services figure was reported as being +90bn, leaving ~-50bn Euros for 2018.
There were 9 countries out of the EU 28 who actually made a trade profit. These were, for the period shown:
Germany      197.1 bn
Netherlands    52.5 bn
Ireland            40.3 bn
Italy                32.3 bn
Belgium          14.5 bn
Czechia           12.9 bn
Denmark           4.5 bn
Slovenia           1.6 bn
Slovakia            0.6 bn

Uk was the highest loser. France at -67 Bn and Spain at -30 bn were the next highest losers, all the others were 18bn or less.

Ask yourself, who would pay £8-£9bn  pa into a 'trade club' where you actually lose £43bn (Euro 50bn) a year to?

3. Joint Operations
These cover many areas, which have caused a stir in recent years, but has been ongoing for many decades. A lot of these were pre EU like the Large Hadron Collider, although the EU try to say they are invented during the 'process'. The LHC may have been built in 1998, but was actually started at Cern in 1971, and involves European and non European Universities, scientists and engineers.
All of these collaborations come at an extra cost, that we are paying now , so, should we wish, and the organisations agree, we can continue with no difference in outlay.

Simply put:
1. PESCO - Permanent Strucured Cooperation a part of the EU Security and Defence Protocol , enacted in the Lisbon Treaty, and signed up to in 2017.
2. Anglo French Nuclear Agreements - Lancaster House Treaties
3. Scientific Research and Collaboration - Royal Society Breakdown, very informative.
4. Education






Refs: 
Uk payments to EU Budget
UK GDP Measurement
Qtr on Qtr GDP differences
2017 GDPR qtr on qtr figures 
Uk contribution 2010-2016
Uk Trade Figures
EU Trade Figures 2018