Ireland remains a major beneficiary of funding by EU

Ireland will still be a substantial net beneficiary of EU funds by the end of the next budget period in 2007, new figures made available by the Department of Finance to The Irish Times have revealed.

Despite a sharp decline in structural funding, buoyant farm receipts will mean that Ireland will still be receiving net annual payments totalling £827 million in 2006 (in 1999 prices).

The figures, new projections by the Department of cash flow to and from the EU over the years 2000-2006 arising from agreement at Berlin in March on Agenda 2000, show a sharp decline in net annual Irish receipts from 1999 to 2006 of £1.1 billion.

However, estimates before Berlin suggesting Ireland would be a net contributor by 2007 or 2008 were clearly overly pessimistic by a year or two - unless the costs of enlargement suddenly accelerate or the next budget severely cuts farm spending.

The likely actual out-turn from Agenda 2000 is the result of two phenomena arising from the Berlin talks - a better-than-expected level of continuing farm support, and significant savings on the contributions side.

Agricultural receipts projections, although particularly hedged by the Department because they will be affected by market and climate conditions, suggest Ireland will still be getting £1,514 million a year in 2006, up very slightly from £1,500 million on the 1999 figures. They will remain largely static throughout the period.

In fact, this represents a small decline in receipts for this sector as the total farm figure for 20002006 of £10.5 billion includes a sum of £400 million in rural development cash which had traditionally been allocated under the structural funds budget.

The contrast with structural funding could not be more dramatic. Receipts from structural and cohesion funds, which will total some £2.99 billion in the 2000-2006 period, will decline sharply from this year, the last of the current programme They will fall from £1.1 billion to £619 million next year and eventually as little as £224 million in 2006 - a fall of 80 per cent.

Cohesion funding eligibility will run out in 2004, leading to the annual loss of some £109 million a year for the last three years of the programme, but the figures do include some £80 million of the Border counties' share from the EU's special peace funding for the North.

Overall, yearly structural funding as a share of Irish EU receipts will fall from 42 per cent to 13 per cent between 1999 and 2006, the not-so "soft landing" we were promised.

Meanwhile, Ireland's contributions to the EU budget, the so-called "own resources" payments, will rise steadily by about three per cent a year from £766 million this year to £942 million in 2006.

The latter figure is £133 million less than projected by the Department before Berlin, the result of a saving of roughly £30 million on a new method of calculating contributions and on significant German success in curtailing overall spending to reduce its own net contributions.

That German success probably cost Ireland as much as £200 million a year in structural funding, of which it got back some £100 million in reduced contributions.

Overall, the Agenda 2000 package is likely to mean receipts to Ireland from the EU over the seven years of £13.7 billion, and contributions of £6 billion, resulting in a net surplus of £7.7 billion.