It should be mentioned: Europe requires a billion euros a year from the UK
Brussels requires London to make annual payments to the EU budget for access to the single market: we are talking about an amount of over €1 billion per year. Izvestia investigated why Europe demanded an "entrance fee" from the British, whether the British budget is ready for such generous contributions to the European box office, what Prime Minister Starmer is blamed for and what the British face from the new EU demand.
"Let's be friends"
As British Prime Minister Keir Starmer recently stated, London should "work more closely with the EU" against the backdrop of global instability, but in reality it is becoming increasingly difficult to work with Europe.
British Prime Minister Keir Starmer
Small businesses complain about bureaucracy, inspections, labeling, high taxes and duties. According to the Federation of Small Businesses, 85% of British companies trading with the EU face problems. A third of them are ready to leave the European market altogether if nothing changes.
"It's a shame that many people are now wondering whether it's worth trying at all," admits Tina Mackenzie, chairman of the Federation's profile committee.
"Pay first"
Brussels has put forward a counter-proposal to London: to pay €1.15 billion (£1 billion) annually in order to gain unhindered access to the EU common market.
"If the UK wants further integration, it will have to pay. There is nothing unusual about this," The Times quoted a European diplomat as saying.
According to the publication, Brussels intends to get Prime Minister Starmer's agreement in principle on contributions to the union's budget.
The European Union itself recalls that the requirement is dictated solely by economic logic — this is a standard condition for non-EU countries wishing to gain access to its single market. The so—called pay to play principle, which also applies to other countries, such as Norway, Switzerland, and Liechtenstein.
— Countries with access to the single European market must comply with certain standards (for example, in the field of regulation, ecology, labor) and often contribute to the EU budget. If the UK wants to maintain preferential access without becoming an EU member, then it will have to contribute to offset some of the costs for the EU," says Sergey Tolkachev, professor at the Financial University under the Government of the Russian Federation.
Payback for Brexit?
In the case of Great Britain, there is also a political context. Especially if we recall the financial requirements of the EU for London after leaving the European Union.
By 2021, the EU has estimated that the United Kingdom will have to pay €47.5 billion ($56.2 billion) as part of a post-Brexit financial settlement.
The UK government estimated the total amount lower in 2018 at about $41.4 billion. Nevertheless, payments to repay the debt are coming in and are likely to last until the 2060s.
— Rather, it looks like an attempt to fix a permanent mechanism. Back in March, the European Council spoke about a permanent financial contribution mechanism for any additional access to the single market, linked to the size of the British economy. The calculation is simple: Switzerland pays €375 million a year for privileged access, and the British economy is about four times as large," explains Jan Pinchuk, deputy head of WhiteBird's stock trading department.
Demanding payments can also be a way to strengthen the EU's position and show other countries that withdrawal is not always beneficial, says Sergey Tolkachev, a professor at the Financial University under the Government of the Russian Federation.
"A blow to the budget"
The British opposition has already called the EU's demand a tax on Brexit.
Critics in the British parliament warn that rapprochement with the EU, including possible entry into the European emissions trading system, will lead to higher energy costs, deindustrialization and a deterioration in the trade balance, as they believe happened during the period of EU membership.
The Conservative Party has already accused Prime Minister Starmer of "betraying Brexit" and violating election promises not to return Britain to the EU orbit.
And, as Kirill Dmitriev, head of the Russian Direct Investment Fund (RDIF) and special representative of the President of the Russian Federation for investment and economic cooperation with foreign countries, said, British Prime Minister Keir Starmer's managerial mistakes in the energy sector led to a situation where residents of the kingdom are forced to face empty shelves in stores amid the energy crisis.
A blow to the budget
That same £1 billion a year is, in general, a feasible burden for the British budget.
According to forecasts by the OBR (Office for Budget Responsibility), UK government borrowing in 2026 will amount to about 4.3% of GDP. With this level of borrowing, an additional £1 billion is about 0.04% of GDP.
However, the economic consequences cannot be avoided.
— This is a significant amount that will be withdrawn from the British treasury every year and will increase the state budget deficit. These are funds that could be used for domestic needs: healthcare, education, infrastructure, and social programs. Of course, all these items of expenditure will have to be cut and taxes raised," Tolkachev notes.
Another option is to finance these costs by increasing the national debt. It is now approaching 95% of GDP, and the cost of its maintenance has increased dramatically (from £39 billion in 2019-2020 to £106 billion in 2024-2025). In such a situation, every penny counts.
A difficult dilemma
For Eurosceptics, any such payments are a blow to sovereignty and a step back to a subordinate position in front of Brussels.
The opposition (the Conservatives and the Reform UK party) has already promised: it will cancel Starmer's plans for greater integration. And this is already a direct threat to the political stability of the Labor government.
In the end, London will have to bargain in order to maximize the amount of contributions to specific economic benefits.
Most likely, it will not be possible not to pay: then trade barriers for British exporters will remain unnecessarily high.
According to a number of studies, only the growth of non–tariff barriers after Brexit will result in a 3.9-4.9% decrease in GDP in the long term compared to the option of remaining in the EU. Without a new agreement, these economic losses will persist. It is expected that the issue of contributions will become central at the upcoming UK–EU summit.
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