The UK didn’t just dodge an EU bullet, it dodged a 1 trillion euro bazooka of debt

A Facts4EU.Org analysis of the colossal EU debt we avoided, thanks to Brexit

Montage © Facts4EU.Org 2024

We reveal the cost to British households which would have happened, if not for Brexit

In 2020 the EU as a collective body started on a series of programmes of huge borrowing on the world’s money markets. This debt is on a phenomenal scale and all EU countries are liable for it.

In today’s report we summarise the extent of this borrowing and reveal how narrowly the UK escaped, thanks to Brexit.

Brexit Facts4EU.Org Summary

Mostly starting in 2020, the EU started borrowing on a huge scale, for the following

‘NextGenerationEU’ : €806.9bn
‘SURE’ : €98.4bn
‘MFA’ : €3.0bn
‘EFSM’ : €42.8bn
‘BoP’ : €0.2bn
‘Euratom’ : €4.0bn
TOTAL : €955.3bn

This does not include the EU Commission’s plans going forward this year or in the coming years. Our analysis shows the EU has already disbursed €544.6bn of this debt.

[Source: EU Commission. Caveat - The EU’s finances are so opaque we cannot be sure we have captured all the borrowing but all the above and what follows are based on detailed research from Commission documents.]

Without Brexit, how much would this have cost UK households?

The United Kingdom's share of this debt burden would have been around 15%, or €143.3bn. This equates to £4,300 GBP extra debt for every household in the UK. [Sources: Office for National Statistics and EU Commission.]

And this is before the extra borrowing the EU Commission is planning.

The Facts4EU think-tank asked the experienced Sir John Redwood for his comments on our report

The Rt Hon Sir John Redwood MP told us

"Facts4EU are the only ones to see the debt elephant in the EU room. No sooner had the UK left than the EU went on a borrowing binge. They plan to borrow around a massive 1 trillion Euros. The member states have to stand behind that debt and pay more money to the EU to pay all the interest.
The UK's share if we had stayed in would be a crippling £4,300 per family. There's a huge Brexit win. Thanks to Facts4EU for telling us that we cannot be trampled by this debt elephant following Brexit."
- The Rt Hon Sir John Redwood, MP for Wokingham and former Secretary of State, commenting to Facts4EU.Org and CIBUK.Org, Fri 02 Feb 2024

These funds all have ridiculous names, such as ‘NextGenerationEU’

We start with ‘NextGenerationEU’. Here is what the Commission says about it.

“NextGenerationEU is the EU's €800 billion temporary recovery instrument to support the economic recovery from the coronavirus pandemic and build a greener, more digital and more resilient future. The Commission's inaugural NextGenerationEU issuance took place in June 2021.”

The Commission disingenuously says that

“Up to €385.8 billion funds loans to individual Member States. These loans will be repaid by those Member States. Should Member States not request the full envelope of loans available under the facility, the remaining amount of loans will be used to finance REPowerEU, a programme to accelerate the EU’s green transition.”

The Commission fails to say that the remainder, making up a combined total of €806.9bn, also represents a liability for all 27 EU countries, whether in the form of loans or grants.

‘SURE’

SURE is the EU programme to finance short-term employment schemes across the EU and keep people in jobs. The total funding raised under the programme in the short period between October 2020 and December 2022 was €98.4 billion, with the EU becoming responsible for ”the world’s largest social bond scheme”.

All SURE funds were raised through back-to-back issuance of SURE social bonds. This saw the Commission become one of the world’s most significant ‘environmental, social, and governance (ESG)-label issuers’, with SURE bonds accounting for 16% of global social bond issuance in 2021. That means debt, with the EU27 on the line.

‘Macro-Financial Assistance’ (MFA)

MFA is a form of financial aid extended by the EU to non-EU countries experiencing a balance of payments crisis. It takes the form of medium/long-term loans or grants, or a combination of these.

MFA beneficiaries include Albania, Bosnia-Herzegovina, Georgia, Jordan, Kosovo, Moldova, Montenegro, North Macedonia, Tunisia, and Ukraine.

On 22 April 2020, the Commission adopted a proposal for a €3 billion MFA package.

‘The European Financial Stabilisation Mechanism’ (EFSM)

The EFSM was created for the EU Commission to provide financial assistance in the form of back-to-back loans to any EU countries experiencing or threatened by severe financial difficulties.

The EFSM was used to provide financial assistance to Ireland and Portugal between 2011 and 2014, and to provide short-term bridge loans to Greece in July 2015. At the end of 2023, the European Commission had €42.8 billion in EFSM debt outstanding.

Today, euro area countries in need of financial assistance are expected to turn to the European Stability Mechanism (ESM), a permanent intergovernmental institution. However, the EFSM remains in place and can be used if the need arises.

‘Balance of Payments’ (BoP)

The EU offers BoP assistance to EU countries outside the euro area that are experiencing or threatened by difficulties regarding their balances of payments.

BoP assistance takes the form of back-to-back, medium-term loans. At the end of 2023, the EU Commission still had €0.2 billion in BoP debt outstanding.

‘Euratom Bonds’

Finally we come to Euratom bonds. The Commission is empowered to issue bonds on behalf of Euratom to finance back-to-back loans for investment projects related to nuclear power safety and decommissioning in EU AND in non-EU countries. The total amount of lending for these activities is €4 billion, of which €3.67 billion has already been allocated.

Observations

As we stated in our report, the EU’s finances are almost impossible to fathom from the available data. What we have shown is what we know about. We have not included future spending and borrowing plans, nor funds which are ordinarily part of the EU’s annual budget.

What we can say for certain is that by voting to leave the EU the British people avoided a liability for borrowing on an epic scale. By leaving the EU, households in the UK will be thousands of pounds better off.

Another huge benefit of Brexit.

We must get reports like this out there

Reports like the one above take far longer to research, write and produce than many people realise. If they were easy, readers would see other organisations also producing these daily. However, there’s little point in the Facts4EU.Org team working long hours, seven days-a-week, if we lack the resources to promote them effectively – to the public, to MPs, and to the media. This is where you come in, dear reader.

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[ Sources: EU Commission | The Rt Hon Sir John Redwood MP ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Fri 02 Feb 2024

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Reader Comments 19

1. Sparky , Friday, February 02, 2024, 07:03:

A touch of schadenfreude in use. Due to Covid countries around the world massively increased debt including the UK. The UK's debt to GDP is 100.00%, a third of the debt is owned by the BoE and therefore the UK Govt through the QE used since 2009 following the banking crisis.
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The FT reported in 2023 that the UK was on track to incur the highest debt interest payments in the developed world and was due to spend £110bn on debt interest in 2023 due to the size of the Uk debt and credit rating. The credit rating agency, Fitch have said re UK. "its negative outlook on the UK’s AA minus credit rating, citing “the UK’s rising government debt and uncertain prospects for fiscal consolidation”.

2. Sparky , Friday, February 02, 2024, 07:26:

In the news from HuffPost this morning following JRM attempt to celebrate the Brexit anniversary on GBNews Yesterday "Jacob Rees-Mogg Taken To School By Farmer Angry At Brexit"

3. Ashley Great Britain , Friday, February 02, 2024, 07:53:

1 Sparky.
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Why the deflection? We all know we have our own financial problems going on but luckily the Gov has a plan and it is slowly working. Liz truss had a far better idea and it would have worked far quicker but various factions didn't want to allow that.
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There's no denying it, The EU is burning up nations money they can't afford. These are vast sums and only the official declared version. How much is hidden as is the EU way?
It's set in stone that the EU will have a financial melt down, It's just a matter of when.
It's a tremendous good fortune that the UK is no longer trapped into this financial black hole.
Cancelling our Eu membership couldn't have come soon enough.

4. Invictus Sol , Friday, February 02, 2024, 11:29:

If there is a trillion pound elephant next door, then look to your toes .This sounds to me like the EU are gearing up for a digital & a green future. Fair play. We could certainly use a trillion investment. Given the times we live in - that is not a crazy bet. Doing nothing is crazier. I notice you have failed to offer comparison as to what we are investing in that makes more sense - in your estimation.
Taking a random but increasingly urgent example, If you look at our Anglophone allies aka 5 Eyes - the US, Canada, Australia, NZ; all without exception are devoted to fossil fuels for mass transportation. All barely lay any high-speed rail when compared to eastern counterparts. This cookie-cutter approach worked for a while but if oil fails, we all fail. Oil is a finite resource, unlike the sun.
China, on the other hand built more solar panels in one year than the US ever has, there is more high speed rail in that nation alone than all the allies combined. The BRICS nations are comfortably sitting on the oil that runs our economic engines & prospering immensely amongst themselves - eg India.
As a comparison, eastern nations, many with smaller economies; have already begun to branch away from the Darwinian dead-end that is a fossil economy. Yet some among us still think solar panels or wind farms ruin our view of the countryside...
If only we were as forward-looking. There is a reluctance to bet big on the future. Short-term gains has been & always will be the order of the day - corporate style. Labour are already spluttering with their Green Deal, for whatever reason. I'd take information like this a wake-up call for the UK. At the very least - a collapse next door

5. Invictus Sol , Friday, February 02, 2024, 11:38:

ctnd:
is further from reality now than it ever was. I'd be more concerned about the white elephants we have on this island or the health of the elephant in the US, whose financial budget has been absorbed by one man to pay for his criminal defence.

6. NH , Friday, February 02, 2024, 11:47:

1. Sparky, "Due To Covid Countries massively increased debt"
The key word is "Countries", the debt's listed above are in addition to individual national debts. The point which you completely seem to misunderstand is if we were still in the EU we would not only have the same national debt we would also have an additional 143.3 Billion Euros (£4,300 per family as stated above) of debt and very little of this, if any, would have benefited the UK.
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1. Sparky, "The UK's debt to GDP is 100.00%, a third of the debt is owned by the BoE"
You don't seem to understand that the BOE is part of the UK Government. So the Government pays interest to the BOE which is part of the Government. So both the debt and the interest payments are realistically not quite as high as they seem. Even if you use the 100% figure as the UK's national debt figure this is still lower than most European larger countries. In addition to their national debts they now also have their share of the EU mutual debts and mutual interest payments.
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1. Sparky, "UK was on track to incur the highest debt interest payments in the developed world"
The UK's interest payments are very high because we have a much larger proportion of index linked debts and UK base rates are presently very high. In the short term this is a problem but as base rates are expected to come down within a year the interest payments will come down at the same time hopefully to more normal rates. Most of the EU's mutual debts are fixed at very high rates which they will be paying for up to 35 years regardless of what happens to interest rates.
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Many countries in the EU have lower debt interest payment s because other EU countries had no choice but to intervene and support their currencies. This resulted in the Germany Bundesbank having a loss in excess of 25 Billion Euros for 2023 alone. If the UK was in the EU we would have probably had to pay a similar amount in addition to all other payments.

7. Gazzablack , Friday, February 02, 2024, 12:10:

2, Breaking news from Sparkless
.
Farmer angry that he's been excluded from the EU's assault on the bloc's farming industry.
Laments not having a reason to take part in violent pan European blockades.
.
Perhaps the EU should drop 'Ode to Joy' as it's anthem, and replace it with the 10CC classic 'Rubber Bulets'
.
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By the way Hiroo, have you worked out what say the UK had in regards to it's contribution to Greece's bailout yet?
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Have you not answered because you don't know?
Or because you do know?
.

8. LuxuryBalloon , Friday, February 02, 2024, 12:25:

Great article. More proof that we are better than the EUers.

9. Sol Invictus , Friday, February 02, 2024, 12:44:

2, Thank you Sparky - I was hesitant to watch the clip at first but I must say that was the only? instance where GB news accidentally acted in the public interest.
If only we could allocate 4 minutes per sector with JRM every evening for more 'reluctantly given' insights such as these & post them all over tik tok. The kids could benefit from the merits of foresight over hindsight.

10. Sparky , Friday, February 02, 2024, 13:06:

7G. Very good the Hiroo tag, surprisingly intelligent. Amazing place and culture by the way, would recommend visiting.
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Re Greece bailouts, from Channel 4 News re the first bailout. “The last bailout came from two sources. The Eurozone, which does not include Britain, contributed 80bn euros. Another 30bn euros came from the International Monetary Fund (IMF), a body of which the UK is a member. It holds around 4.5 per cent of the shares in the IMF, and thus the taxpayer stands behind a 4.5 per cent of the IMF chunk of bailout – a sum which comes to slightly more than £1bn”

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