23rd Jan 2022

Blair finds support for British rebate

After weeks of fighting a lonely battle defending the British rebate against the wishes of 24 other member states, British Prime Minister Tony Blair finally found some support on Monday (13 June) in the form of German opposition leader Angela Merkel.

Ms Merkel, who is fighting to become Germany's next chancellor in September when elections are expected to be held, had a bilateral meeting with Mr Blair shortly before he went on to meet Gerhard Schroder, the current German leader.

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  • Angela Merkel - looking to become the next leader of Germany (Photo: CDU)

After the meeting, Ms Merkel, the leader of the Christian Democrats, expressed sympathy with Mr Blair's position on the annual British rebate, which runs to €4.6 billion a year and is set to rise substantially after 2007.

"The British rebate is the result of the fact that Britain as a net contributor gets significantly less than other countries in agricultural subsidies, especially France but also Germany", she said.

Ms Merkel also suggested that if other countries want Britain to give up its rebate they should have negotiated with London in 2002 when a deal on agriculture was agreed for the years up to 2013.

Britain's rebate was won in 1984 and was justified at the time because the UK received relatively little of the EU's farm subsidies which accounted for 70 percent of the budget at the time.

Today, the Common Agricultural Policy accounts for 40 percent of the budget and Britain is one of the wealthiest states in the EU.

Ms Merkel's comments give Mr Blair a preview of what it might be like to work with Germany under a conservative chancellor, whose economic polices are more in tune with Britain's than chancellor Schroder's.

However, Mr Blair still has to face a meeting of EU leaders at the end of this week where the 2007-2013 budget is set to be one of the toughest issues on the table.

Germany and France have combined to put Britain on the back foot by insisting that they will show some flexibility if Britain does - but both countries have insisted that their flexibility will not concern the EU's farm policies, which London wants to see scaled down even further.

After meeting Mr Blair on Monday, Mr Schroder said national egotism should be given up ahead of the budget discussions.

Ahead of the summit, Britain's commissioner Peter Mandelson has also entered the fray calling for Britain to think about reform of the rebate if others show willingness to move.

In a speech to the Fabian Society on Monday evening, the trade commissioner said "refusal to talk about much needed budget reform is part of the old conservatism in Europe which the Barroso commission is determined to change".

"But Britain should be careful not to play into the hands of this conservatism. Ministers must be consistent and courageous in their reformism, and be prepared, in the context of a deeper re-think about the EU’s budget, to look at reforming Britain’s rebate", he added.

"For a start it is surely wrong to ask the poorer new accession states to pay for any part of the rebate".

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