Introduction

The debate surrounding Brexit often includes concerns over the financial implications for the rest of the European Union (EU), particularly in countries like France and Germany. One common question is whether the burden on the EU will become intolerable as they strive to support nations like Greece and Italy. This article aims to address these concerns, examining the financial realities and potential impacts of Brexit on EU finances, particularly for France and Germany.

Finite Contribution and Its Significance

The impact of Brexit on EU finances is a topic of much discussion. It is important to clarify that UK contributions to the EU are ring-fenced, meaning that concerns over issues such as the Euro crisis do not directly affect the UK's financial contributions. In fact, the UK is a net contributor to the EU budget, contributing 0.19 of its Gross National Income (GNI), compared to 0.27 from Germany. This relationship means that while the UK pays more, it does not subsidize other countries like Greece and Italy.

EU Spending and Its Distribution

The EU budget for 2016 amounted to approximately 118 billion Euros, with only about 7 billion Euros allocated to the UK. This means that cutting back on UK contributions would significantly reduce the overall EU budget, potentially making it more challenging for the EU to finance critical projects and aid to countries in need. Greece, for instance, receives 2.43 of its GNI from the EU, highlighting the significant economic boost provided by EU funding.

Brexit's Minimal Impact on Taxpayers

It is often stated that UK taxpayers pay into the EU budget at a rate that can be compared to other countries, but the perception is often exaggerated. For instance, many UK voters overestimate the amount of UK tax paid to the EU by a factor of ten or more. In reality, the UK's net contribution to the EU is around 0.5% of its GDP, or roughly the amount spent on healthcare. This makes the UK's contribution a relatively small part of the overall EU budget.

Given that the UK is a net contributor, the German taxpayer will find the impact of Brexit negligible. The EU bureaucracy is dependent on contributions from its member states, and with less financial backing, there may be a push for more efficient spending and accountability. This could be influential in curbing tax avoidance, both at a personal and corporate level, which is currently impeded by the UK's contributions.

Empowering Taxpayers Through Accountability

The real danger for the remaining EU member states lies in the centralised bureaucracy's ability to spend taxpayer money. As long as the bureaucracy has someone else's money to spend, it remains relevant. However, if the money is limited, the EU oligarchy will lose power. This shift could lead to more accountability and transparency in how funds are used, which could benefit taxpayers across the EU.

Currently, many taxpayers in Europe have not questioned the spending of their money, especially from net contributor countries like Germany. However, as the budget becomes tighter, there will likely be more pressure for transparency and accountability. This could result in more scrutiny of EU spending and ultimately lead to a rebalancing of the budget.

Conclusion

While Brexit will undoubtedly have some financial implications for the EU, the overall impact is likely to be minimal, especially for net contributor countries like Germany. The EU's reliance on contributions from its member states means that there is a growing need for efficiency and accountability. This could lead to a more transparent and accountable system, benefiting taxpayers in the long run.