Home » Customs Union » Let’s Talk Customs Union!

Let’s Talk Customs Union!

by John Brian Shannon

In the European Union, it’s all about the money.

For if it isn’t the EU holding-up the UK for £40 billion to leave the EU, it’s the European Union wanting billions for a Customs Union deal that will benefit continental Europe moreso than it will benefit the United Kingdom.

  • To be fair, there’s no word yet if there’s an up-front-payment component associated with the rumoured Customs Union deal.
  • Let’s not forget that the £40 billion number was arranged to pay an estimated £9.15 billion in British expat pension and other legitimate liabilities that the UK will rightly owe to the EU over the next 50-years.
  • Nobody in the UK disputes the £9.15 billion number (although everyone agrees it’s an approximate number as expat lifespans rise and other legitimate costs could increase in the future) but some wonder how £9.15 billion became £40 billion.

As much as UK citizens are tired of paying a (net) £8.6 billion annually to feed the EU’s budget, it looks like there will be a cost for a Customs Union deal with the EU. Still, few Britons would begrudge paying reasonable amounts (like Norway does) to be in a Customs Union (but not in a Political Union) with the EU.

Just make sure it costs less than £8.6 billion annually, Ms. Prime Minister…


For the record, let’s see how much the UK was projected to contribute to the EU budget

UK contribution to EU budget

This statistic presents the net contributions that the UK is predicted to make to the EU budget from 2016 to 2022. The peak of contributions is expected to be in 2019/20 at net 12.2 billion British pounds. Find more statistics at Statista.com

If you’re handy with a calculator, you’ll see that’s a net contribution of £71.6 billion over a span of 7-years and you’ll also note that the average net contribution will rise to £11.1 billion annually when averaged over the next 5-years. The £8.6 billion figure that we often hear came about from the average net contribution over the past 5-years.

Wow, that’s a lot of net contributing. Remember, the term “net” means you’re paying more in than you get back.


Time for the EU to Lower Their Spending or (better) Turn EU27 Nations into Net Contributors

Some blocs have ‘champagne taste and wildly varying contributions from member nations’ and the EU is surely that.

Once the UK leaves the union it will be primarily Germany propping-up the bloc as most of the EU27 are net ‘takers’ from the EU budget — and the few net ‘contributors’ are small countries that couldn’t float the EU budget no matter how hard they would try.

Sweden has a great economy for example, but with a population of 9-million people how could they afford to pay for the programme spending of 450 million EU citizens? To cover the EU budget you need two economic near-superpowers. Italy is still putting itself back together after the last recession and France’s economy is a break-even proposition — although the French live very good lives, and good for them. No wonder Germany enjoyed splitting the EU’s bills with the UK since 1993, but especially since 1998. Ultimately however, Germany got plenty of say in EU affairs while the UK was (basically) allowed to comment on EU affairs. But the UK knew that going in, so no complaining!

Let’s see how committed Germany remains to the EU project 5 or 10-years on when it is paying into the EU budget without Britain’s help. German taxpayers and German business might force the country’s politicians to pull out of the EU and amp-up the stature of the EuroZone into a full political and economic bloc. That might be a smart move for EuroZone countries, but it could result in disaster for some non-EuroZone nations.

In the meantime, let’s hope the EU manages to tame its spendthrift ways or that it finds ways to turn ‘taker’ member nations into ‘contributor’ member nations before the EU loses one of its best annual contributors.

That would also have the benefit of helping the keep the continent’s number one economy (Germany) flying high — which is uber-important because one of the things Germany’s robust economy is financing via their contributions to the EU budget is continued peace and prosperity in Europe. And judged by that standard over the past 70-years both Britain and Germany deserve a truckload of Nobel Peace Prizes. Jolly good, gute Freunde!

Until the Brexit implementation period ends in a little over 2-years, the UK must continue paying a net £11.5 billion annually (2019-2021) and it will still need to pay the expected £9.15 billion in expected future liabilities (which for some as yet unexplained reason was trotted-out as £40 billion) and is payable up-front, and it looks like it must also pay to gain or be in a Customs Union agreement with the EU.

As Theresa May has said many times, ‘Nothing is agreed until everything is agreed’ which may yet prove to be among the wisest words a British Prime Minister ever spoke.

Interesting times, indeed.


2 Comments

  1. Tim Walker says:

    There has been speculation about the break up of the EU.

    One scenario has Germany creating a trade bloc and military alliance with the Central European states.

    In another scenario Germany partners with Russia.

    And France? If the EU were to break up, I would expect the French to try to create a French dominated trade bloc.

    I would expect the smaller states of Europe to be dominated by one or another of these powers.

  2. Hi Tim,

    Even though I complain about certain aspects regarding the EU (a democratic deficit in Brussels) I hope the European Union does not break-up, ever.

    I have suggested that EuroZone countries might form a political union if the EU were to ever dissolve and that could be advantageous for those countries and those countries only.

    Perhaps the Scandinavian countries and Ireland might join The Commonwealth if the EU ceased to exist? That would be a good match-up for all those players.

    Although progress towards a peaceful and united Europe has been uneven since 1945, I think there’s everything to gain for the continental European states by keeping strong political and economic ties between them.

    Of course this does not mean the EU political architecture is the only way to achieve those noble goals, but it (mostly) works for the continentals — which is much better than reverting to a collection of littoral states where conflict could again thrive.

    Best regards! JBS

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