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21st Sep 2020

EU's big three call for long-term budgetary restraint

  • UK Prime Minister David Cameron (l) jokes with EU commission head Barroso at the summit (Photo: consilium.europa.eu)

The EU's three largest member states - Germany, France and the UK - are set to publish a text on Saturday (18 December), calling for spending restraint in the bloc's long-term financial framework (post 2013).

Initiated by British Prime Minister David Cameron, the letter will call for a freeze in the long-term spending plan, excluding inflation, and also seek to rein in the bloc's 2012 and 2013 annual budgets.

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"The commitment appropriations over the next multiannual fiancial framework should not exceed the 2013 level with a growth rate below the rate of inflation," the text is set to say.

The move puts the group of large member states on a direct collision course with the Brussels-based EU institutions, already battered after their call for a six percent rise in next year's EU budget was cut in half by national capitals.

With the commission not set to publish formal proposals on the multi-annual financial framework until June 2011, the EU institution may also perceive London's latest initiative as a move to undermine its right of initiative. Still undecided, the framework's period is likely to cover 2014-2020. It is then broken down into annual budgets.

Poland and other eastern countries may also be horrified by the attempt to curb future EU payments of which newer member states are large recipients. But other EU members are also set to sign the austerity-letter, with Austria, Italy and Finland among the names suggested by diplomats.

"What I am doing, together with our key partners in Europe, is putting down a firm marker for these [budgetary] negotiations," Mr Cameron told journalists at the close of a two-day European Summit on Friday (17 December). "All around Europe countries are tightening their belts to deal with their deficits. Europe can not be immune from that."

Despite London's eagerness to herald the joint call for a budgetary "freeze", the letter's text suggests actual post-2013 spending may increase at just below the rate of inflation.

German Chancellor Angela Merkel suggested her finance department was planning for a one percent actual increase in the size of the long-term budget. As the EU's largest net donor to the EU budget, Berlin is keen to see restraint in the multi-annual framework, especially as greater development in the eastern half of the country is likely to mean a fall in EU cohesion payments.

Ms Merkel confirmed that her name will be on Saturday's letter. "Basically, it will be a statement focusing on the period up to 2020 - focusing on the 1 percent target that we've set ourselves already for the financial perspective," she said.

French President Nicolas Sarkozy said he hoped it will be signed by "the greatest possible number" of EU member states. Both he and Mr Cameron denied there had been backroom discussions to secure France's substantial share of EU farm payments in return for Britain holding on to its EU budget rebate.

The decision to publish the joint text a day after the summit ends is designed so as not to dilute the meeting's main message of defending eurozone stability, sources suggested.

European Commission President Jose Manuel Barroso sought to downplay the letter's significance.

"We know different groups of member states sometimes try to position themselves," he said. "What is important in the end is the commission's proposal that is being put forward [next June], and then the discussions on the basis of that proposal."

European Council President Herman Van Rompuy was also phlegmatic. "If there are letters, we are very polite people, we read our letters we receive," he said.

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