Special Report 105 - Ireland’s Transactions with the EU in 2017
Published on 27 February 2019
Membership of the European Union (EU) gives rise to obligations on member states to contribute to the EU budget. At the same time, member states receive funding from the EU through a number of channels.
There is no single source that provides an overview of Ireland’s financial transactions with the EU, including Ireland’s contribution to the EU budget, the funding it receives, and financial corrections and other matters impacting on the flow of funds. This report compiles information on financial transactions between Ireland and the EU, with the aim of providing a comprehensive overview.
The EU budget is funded mainly (more than 90% in most years) from ‘own resources’ sourced from member states. The rate of contribution of own resources by member states is capped — currently at a maximum of 1.23% of the aggregate of member states’ gross national income.
Financially, Ireland was a net beneficiary of the EU until 2014. Since then, Ireland has received marginally less than it has contributed, as shown in Figure 1. Ireland’s contribution to the EU budget in 2017 was €2 billion. Financial projections suggest that the contribution will increase significantly in future years.
Long-term commitments also arise from Ireland’s membership of the EU. The value of these is subject to inherent uncertainties. Although they are likely to be significant, there is no estimate of the value of those commitments
The EU has committed to spending €1,087 billion (at 2018 prices) for the period 2014 to 2020 under the current multiannual financial framework (MFF). Negotiations have commenced on the MFF for the period commencing 2021. These are key, as the outcome of these negotiations will set the financial relationship for the medium to long term.
Ireland received €1.8 billion in EU funding in 2017. Over 80% of this was in respect of agriculture and rural development. This funding makes a significant contribution to the viability of farming in Ireland.
Approximately 90% of EU funding received in 2017 was administered through central government departments. The remaining 10% goes directly to public bodies, the private sector and EU bodies. There is no consolidated overview of the receipts, and the accounting treatment for EU transactions is inconsistent across schemes.
An EU Commission review indicates that Ireland made relatively more progress than the EU average in selecting projects for structural funding. Ireland is also relatively good at drawing down available structural funds.
While the EU Commission is ultimately responsible for managing the EU budget, many bodies have oversight and audit responsibilities. Compared to other member states, Ireland incurs a relatively low level of financial corrections as a result of audits of EU transactions. For example, corrections imposed in respect of Ireland’s EAGF spending in the period 1999 to 2017 amounted to 0.4% of the funding received. The EU Commission reported that in the period 2007- 2013, Ireland had a relatively high level of financial corrections (2.9%) of ERDF and ESF funding received. However, the full allocation of such funding was drawn down by Ireland because expenditure deemed ineligible was replaced by other eligible expenditure.