- UK losing out on funding as other EU members gain
The value of grants given directly by the EU to UK organisations* has already dropped by 20%, falling from €1.94 billion in 2016 to €1.55 billion in 2017.
It is significant that direct grants to UK organisations have already started to fall long before the scheduled date on which the UK finally exits the European Union.
Other EU member states have seen marked increases in grants over the same period, with EU grants to Germany increasing by 20% from €1.41bn to €1.93bn, and grants to France increasing by 16% from €1.32bn to €1.53bn (see graph below).
Grants from the EU are financial contributions to projects from the EU budget or the European Development Fund. Grants are given to specific projects related to EU policy goals, and usually follow a ‘call for proposals’ which external organisations then bid for.
Among the areas that receive EU grant funding, examples include:
- Agriculture and rural development
- Climate action
- Digital society and economy
- Migration and home affairs
- Maritime affairs and fisheries
The UK Treasury announced in July 2018 that EU grant funding secured by UK organisations is guaranteed until the end of 2020. It is not anticipated that any EU grant funding will be available to UK businesses once Brexit is complete.
UHY Hacker Young says UK SMEs have benefited from a huge amount of EU grants, funding projects which may have otherwise not progressed and financing activities like R&D and bringing new products to market. Without this funding, UK businesses are missing out on a large pool of potential investment.
Andrew Hulse, partner in our Sheffield office, says: “We all knew that EU grant funding to the UK was likely to be cut after Brexit, but it appears the EU got a two-year head start on the process.”
“UK businesses are already missing out on hundreds of millions of euros in funding.”
“The Government needs to recognise this shortfall and urgently put in place targeted grants appropriate to the needs of businesses and particularly SMEs where this funding often has the greatest impact.”
“The combined effects of Brexit and the withdrawal of EU funding could see UK businesses fall behind businesses in France and Germany in key areas of grant-supported activity like R&D. This could be very damaging in the long term as the UK seeks to become more competitive in the post-Brexit world.”