Ireland's contribution to the EU budget is expected to rise to €2.7 billion this year, the Department of Finance has confirmed. This is 35 per cent higher than the €2 billion paid in 2017 and more than double what the State paid five years ago.
The department’s chief economist John McCarthy also warned this figure may rise by an additional €400 million a year as a result of the hole in the EU’s budget left from the UK’s departure, albeit this is subject to negotiation.
Mr Carthy was appearing before the Dáil's Public Accounts Committee (Pac) along with other officials to discuss the department's financial accounts for 2016.
He said Ireland’s EU contribution was not unduly impacted by the actions of multinationals, which tend to exaggerate official measures of national income.
This is because it is calculated on the basis of gross national income (GNI) per capita, a measure which strips out multinational profit flows, rather than on the basis of gross domestic product (GDP), the more conventional measure of economic growth.
“We would have a big difficulty if it was done on the basis of GDP,” Mr McCarthy said, noting GDP here has jumped more than 50 per cent in the past five years, largely because of the distorting impact of multinationals.
“Irish living standards are better assessed on a GNI basis. There is an issue with GDP overinflating living standards but in terms of the EU contribution it kind of works its way out,” he said.
In 2016, Ireland became a net contributor to the EU Budget for the first time since it joined the bloc in 1973 with the State paying in more than it received in grants and payments. The majority of Irish receipts, approximately two thirds, come in the form of direct payments to farmers.
