Our payments to EU are freed from 26% GDP but may not escape Brexit

Expectations that Ireland's contribution to the EU budget will not be as high as expected, following our much-publicised 26 per cent growth figure, will be welcomed by the Department of Finance as budget season approaches.

MEP Brian Hayes wrote to the commission's budget tzar, Commissioner Kristalina Georgieva, seeking clarity following concerns that Ireland's "leprechaun economics" could lead to higher EU budget contributions.

While no specific figures were provided by the commissioner, she confirmed that GNI (gross national income) rather than gross domestic product (GDP) would be used to calculate our contribution, so the final figure will be much less than the €280 million touted.

With the EU still embroiled in discussions about the final size of the 2017 budget, exact clarification for each country, including Ireland, is unlikely before November.

In the meantime, the CSO will be busy compiling the GNI figure, based on a “GNI key” which will be assessed by Eurostat’s GNI committee.

Annual contributions to the EU budget have become a new reality for Ireland since the country moved from being a net recipient to a net contributor three years ago.

Ireland given €40 billion

Few would quibble with the new expenditure line – Ireland has received about €40 billion from the EU since joining in 1973, while other countries have long been forced to cough up billions more than they receive from Brussels. Germany's net contribution was €15.6 billion last year, while Britain's stood at €12.7 billion – one of the key arguments of the Leave campaigners in the British referendum.

Of more concern to Ireland will be the long-term impact of Brexit on Ireland's budget contributions. With the loss of the EU's second-biggest contributor, other member states will have to make up the difference even if the overall size of the budget is reduced. A German finance ministry report earlier this month found that Germany will be forced to contribute an extra €4.5 billion in 2019 and 2020.

While the precise budgetary impact of Britain’s departure is unknown – it is not yet clear if Britain will definitely stop contributing to the EU budget in the event that a “soft” Brexit is negotiated – some annual impact on the national exchequer is inevitable.

Providing extra cash to Brussels is likely to be yet another negative impact of Britain’s decision to leave the EU as Ireland contemplates its EU future post-Brexit.