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Opinion

Why not have another go at the EU budget?

David Hannay / Oct 2015

From time to time the suggestion emerges from the wilder shores of euroscepticism that Britain should re-open the issue of the EU budget as part of the renegotiation currently under way in Brussels. This is based on two completely erroneous assumptions – that Britain is still paying a disproportionate share of the budget and that Tony Blair gave away a huge proportion of the Thatcher rebate at the time of the last major enlargement in 2004.

Let us start by looking at the facts. The latest available precise figures relate to the EU’s 2013 budget. They show the following figures for the net cost of the budget per head of population for those Member States most similar to Britain in prosperity.

Member State

Post-rebate gross contribution (€mns)*

Population (mns)**

Post-rebate gross contribution per capita (€)

Denmark

2899

5.6

517

Sweden

4212

9.6

439

Finland

2159

5.4

397

Netherlands

6552

16.8

390

Austria

3191

8.5

376

Germany

29376

82.1

358

France

23292

65.9

353

Italy

17168

60.6

283

United Kingdom

17068

64.1

266

* National contributions (GNI and VAT-based own resource contributions; traditional own resource payments; UK correction; lump-sum reductions for Sweden and the Netherlands; and JHA opt-out adjustments for Denmark; Ireland and the UK). Source: European Commission Financial Report 2013.

** Total population (national accounts data).

These figures, which are, by a long way, the best comparison of Member States’ relative budget contributions, certainly do not bear out the assertion that Britain is not bearing a disproportionate burden. As to the rebate, the cumulative total re-paid to Britain since 1985 now sums to approximately €114.5 billion using today’s exchange rate; and it is still narrowing and will continue to run at many billions a year. As was wisely said in a different context “a million here and a million there and soon you are talking about real money.”

If these are the facts, which they are, what sort of sympathy would a British suggestion to re-open the budget issue evoke? None, I would guess.

There are, in addition, other reasons not to open the budget issue now. One is that it would be an act of gross bad faith. The budgetary limits of EU spending up to 2020 were set quite recently in the multi-annual Financial Framework, to the British government’s frequently reiterated satisfaction. To re-open the figures now would be to invite all those Member States who settled in 2012 for lower figures when they wanted to push for more spending; and that group now contains an increasing chorus of anti-austerity campaigners. The most compelling argument of all, if the British government were to re-open the budget issue as part of its re-negotiation there would be a real risk that other Member States would seek a reduction in the rebate as the price for agreeing to other changes Britain was seeking. That would be a recipe for failure in these negotiations.

All of this leads to the suggestion that those pressing for the budget issue to be re-opened are either ignorant of the facts (unlikely, but possible); or they want the renegotiations to fail (very likely). The government is surely wise not to be giving any heed to their special pleading.

 

The original version of this article can be found here

David Hannay

David Hannay

October 2015

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