EU cuts contracts given to UK businesses – public procurement spend falls 30% in a year

Publications that covered this story include:  The i on 19 August 2019.
    • Value of public procurement contracts secured by UK businesses predicted to drop further
    • UK losing out on spending as other EU members gain

The value of central EU public procurement contracts secured by UK businesses fell 30%, to €108m in 2018, from €155m in 2017*, our research shows. UK businesses could see a further drop in new EU contracts as Brexit approaches.

The total amount of central spending implemented directly by the European Commission (EC) on public procurement was €3bn last year, representing 12% of the total €23bn direct expenditure of the EC in 2018.

Other categories of direct spending implemented by the EC include grants and budget support.

Whilst the UK has experienced a steep decline in commercial contract awards from the EU, most other EU Member States have seen a sharp rise since the 2016 referendum, for example, the Netherlands has seen a 47% increase from €96m in 2016 to €141m in 2018 (see graph below).

UK businesses could also be in danger of losing millions of public procurement spending from the EU’s research and innovation programme, Horizon 2020**. Without this funding, UK businesses may struggle to finance innovative R&D projects.

Andrew Hulse, Audit partner in our Sheffield office, says: “A drop in direct EU spending is causing some UK businesses scrambling to plug the hole.”

“The EU is clearly not waiting for the October 31 Brexit deadline before cutting spending on British businesses. It is fairly obvious what Brexit is going to mean for UK businesses trying to win work from the EU.”

EU public procurement refers to the process by which the EC will directly purchase work, goods or services from companies. Public procurement contracts follow a ‘call for tenders’ process which external organisations then bid for.

Example areas of public procurement contracts tendered by the EU include:

  • Environmental conservation
  • Telecommunications and technology
  • Education
  • Security and counter terrorism

Value of public procurement contracts secured by UK companies falls as British businesses are overlooked for spending