28th Nov 2021

New UK budget offer gets up French nose

The UK presidency's new EU budget proposals give no fresh concessions on the UK rebate and continue to push France for farm aid reform in 2009, but do boost spending by €2.5 billion via gifts to individual member states.

"There is very narrow room for negotiation", a British government spokesman warned, adding "We will see no better deal this week or next year."

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  • The deadlock could lead to a collapse of summit talks on Thursday night (Photo: The Council of the European Union)

The offer means overall EU spending limits of €849.3 billion (1.03 percent of EU gross income) in 2007-2013, instead of the €847.8 billion suggested last week.

All the extra €2.5 billion would go on aid to poor EU regions, of which €1.55 billion would go directly to new member states.

The UK rebate would fall by just €8 billion instead of the €14 billion requested by Paris.

The UK presented the offer as a "historic shift" of EU financing from the old EU 15 to the new EU ten, which stand to pocket a gross sum of €260 billion or €2,500 per capita in the next seven years.

Summit in danger

France, which wants a deep legal reform of the UK rebate and has ruled out any common agricultural policy review (CAP) before 2013, rejected the new offer almost immediately.

"At a first look, our reaction is the same as for the previous text because nothing substantial has changed", a French diplomat told EUobserver. "The UK rebate is the key to fair contributions."

Last week, French foreign minister Philippe Douste-Blazy called the previous UK text "totally unacceptable."

The deadlock could lead to a collapse of summit talks on Thursday night, but London did give cryptic hints that the UK negotiating box is not empty yet.

Talking about the wording of the proposed 2009 review of EU contributions, which could include the UK rebate as well as CAP, a British diplomat said: "that will have to go to the summit."

With no deal this year or next year leading to a 30-60 percent cut in funding for new member states, Paris and London are playing for high stakes.

"I am not saying the EU would not survive, it probably would, but it would be a very different EU", a senior Slovak diplomat indicated.

Christmas bag

France aside, the UK's presents for other member states could help key players such as Poland, the Netherlands, Spain and Sweden swallow the latest offer.

In terms of simple extra cash, Poland would get €206 million, Czech Republic €200 million, Slovakia €165 million, Hungary €140 million, Latvia €82 million, Lithuania €50 million and Estonia €48 million.

Poland, the harshest critic of the UK position so far, would also get its hands on €1 billion grant based on currency exchange questions hanging over the zloty.

Meanwhile, new rules on calculations of VAT contributions to the budget could see eastern Europe better off in real terms by €10 billion, the UK said.

The VAT boost would come on top of softer EU structural fund spending rules that could save the new members another €5 billion.

Slovak officials said on Monday the softer EU spending rules alone would see Slovakia just as well off in real terms under the UK's proposals as under the Luxembourg offer.

Old members not forgotten

Old member states concerns' have not been neglected, with the Netherlands now just €150 million short of the €1 billion cut it wants compared to the Luxembourg offer.

Sweden stands to get an extra €315 million back and Spain has been given new cohesion fund guarantees worth €450 million.

Two of the poorest old members, Greece and Portugal, would also be included in the new VAT rules and softer spending regulations.

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