EU funding in the UK

Public and private sector organisations in the UK receive funding from the EU through various channels – the UK received a total of €6.6 billion (about £5.9 billion) in 2018. The majority of EU funding is administered in partnership with national and regional authorities in Member States, though a share of it is directly administered by the European Commission.

Following the UK’s exit from the EU in January 2020, EU funding programmes generally remain open until the end of the transition period in December 2020. After this point, new funding will cease, although any funding programmes that have already been agreed will continue to run until their normal closure. The UK Government has put some measures in place to replace this funding, and details of others are expected to be announced in due course.

Channels of funding

The majority of EU funding in the UK comes from the European Structural and Investment (ESI) funds (discussed in section 2) and the European Agricultural Guarantee Fund (discussed in section 3). For the 2014-20 funding period, the UK was allocated €17.2 billion and €22.5 billion through these funds respectively.

The ESI Funds are the EU’s instrument for reducing disparities in the level of development of its various regions and for helping less developed regions to catch up. The bulk of UK funding via this channel has come through the European Regional Development Fund (ERDF), which was allocated €5.8 billion of EU funds in 2014-20, and the European Social Fund (ESF) with an allocation of €4.9 billion.

Different regions within the UK have been allocated varying levels of funding, with less developed areas (particularly in West Wales and the South West of England) receiving more per person than other areas. The largest single allocation of 2014-2020 ESI funding in England is for HM Prison and Probation Service’s Co-Financing Organisation, to fund activities that support the reintegration of prisoners back into the work force. 53% of the cost of this £247 million project will be funded by the ESF, with the remainder met through national co-financing.

The European Agricultural Guarantee Fund (EAGF) is the primary financial mechanism used for the implementation of the EU’s Common Agricultural Policy (CAP). The EAGF consists of direct payments to farmers to stabilise their revenues and market measures to tackle specific market situations, and the UK was allocated €22.5 billion for the period 2014-20.

Direct funding

Organisations in the UK have also been able to apply directly to the European Commission for funding from various other streams, often on a competitive basis following calls for applications. The UK was one of the leading Member States in securing funding for research and innovation and various other projects, with around 14% of funds allocated from the Horizon 2020 programme going to the UK, and three British universities are in the top ten recipients to date. The typical aggregate value of direct funding is around £2 billion per year.

Funding outside the EU Budget and for non-Member States

In addition, projects in the UK can be supported by EU institutions with funding from outside the EU Budget. Most notably, the European Investment Bank (EIB) – which borrows money on capital markets and lends it on favourable terms to projects that support EU objectives – committed an average of €4.4 billion to UK projects each year between 2010 and 2018. Many of these were major infrastructure projects, as well as some supporting growth and employment.

Non-Member States also have access to certain streams of EU funding. Countries that are closely aligned with the EU and participate in programmes alongside Member States typically have to make payments into the EU Budget, generally relative to the size of their economy. Other funding streams are available for countries seeking accession to the EU or sharing a border with it, and some aid funding also goes to developing countries through instruments such as the European Development Fund.