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2nd Mar 2024

UK slams 'ludicrous' budget proposal

The UK has reacted furiously to a proposal unveiled today by the European Commission that would see the British rebate from the EU budget phased out over a four year period.

Brussels has proposed that the current system - whereby the UK is the only member state to receive a rebate of about 4.6 billion euro per year from the EU budget - be gradually altered so that all member states that pay more into EU coffers than they get back receive a rebate.

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If net contributions exceed 0.35 percent of the Gross National Income (GNI) of a member state, the country can expect two thirds of it back, so long as the refund does not exceed 7.5 billion euro per year.

This would mean that Britain's rebate would be halved and that other net contributors such as Germany, Sweden and the Netherlands would receive money back for the first time.

\"Non negotiable\"

UK diplomats reacted furiously. "This proposal is non-negotiable", said one British source.

"It is ludicrous and manifestly unfair to suggest doubling the UK's share of the bill while leaving nine billion euro a year flowing into France's coffers from farm subsidies".

Building a bridge

But the Commission said that the proposal was already a compromise position between those that wanted to see the UK rebate continued indefinitely and those that wanted it scrapped straight away.

Unveiling the plans, budgetary commissioner Michaele Schreyer said that it "builds a very good bridge between those who say there should be no change and those that propose that the rebate should disappear entirely".

Watered down

And the proposals were already watered down at the request of the two British commissioners, External Relations Commissioner Chris Patten and Commission Vice-President Neil Kinnock.

They argued that a proposal to scrap the rebate would place UK prime minister Tony Blair in a difficult position since he has promised to defend the rebate, won famously by the then prime minister Margaret Thatcher in 1984.

It will make his task to persuade an already eurosceptic British public to vote yes to the Constitution in a referendum all the more difficult, it is argued.

Ms Schreyer agreed that the original proposal - to scrap the budget entirely - was not realistic. She said that Brussels was "fully aware" of the sensitivity of the issue in the UK and said that the four year phasing out period was introduced "in order to take account of the political facts of life".

However, despite the compromise, Ms Schreyer said that Messrs Patten and Kinnock were unable to agree with the proposal issued today, although no vote was taken by the body of 30 commissioners.

A Commission official said that "there was no unanimity" and revealed that "most" commissioners were against the British.

One battle in long and bitter war

The proposal on the budget rebate was one part of a wider proposal on the EU budget for the period 2007-2013 (known in EU jargon as the "financial perspectives").

And Brussels faces a fight not just with the British over the rebate but also with other net contributors over the amount they are being asked to pour into EU coffers.

The amounts unveiled by the Commission today are little changed from the proposals issued in February, which caused a storm of protest from some finance ministers.

Governments from six member states (the UK, France, Germany, the Netherlands, Austria and Sweden) have said that they want to see the EU budget capped at one percent of GNI but the Commission proposes an average of 1.14 percent over the seven year period.

The decision over the EU budget must be taken by unanimity and threatens to be a drawn-out and bitter process.

A senior German diplomat recently said that the negotiations were set to be harder than those over the Constitution.

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