Bud­get row es­ca­lates as UK bill could reach € 3.6 bln

Financial Mirror (Cyprus) - - FRONT PAGE -

The row over a hefty top-up to the UK’s con­tri­bu­tion to the EU bud­get wors­ened on Mon­day as Prime Min­is­ter David Cameron re­peated he would not pay, and the EU Bud­get Com­mis­sioner warned there was no pos­si­bil­ity of de­lay­ing pay­ment with­out re-open­ing ques­tions over the UK’s re­bate on the Euro­pean bud­get.

Fail­ure to pay could re­sult in a fine of up to EUR 250,000 per day, a sum which could dou­ble if the bill re­mained un­paid after a year, EurAc­tiv un­der­stands.

The bill is in fact more than the EUR 2.1 bln re­ferred pre­vi­ously. The to­tal due on De­cem­ber 1 is ac­tu­ally EUR 3.591 bln, EU sources ex­plained.

The UK would how­ever re­ceive a one-off re­bate of EUR 1.491 bln un­der a sep­a­rate amended bud­get for 2014 cur­rently un­der ne­go­ti­a­tion, and ex­pected to be agreed on be­fore the De­cem­ber dead­line. That amended bud­get would re­duce the amount owed to EUR 2.1 bln.

STA­TIS­TI­CAL CHANGES

The EU bud­get is partly fi­nanced on the ba­sis of the na­tional in­come of mem­ber states. The bill arises from ad­just­ments to gross na­tional in­come fig­ures posted by mem­ber states which lead to ad­just­ments in their con­tri­bu­tions to EU bud­get.

The UK’s bill is par­tic­u­larly large be­cause its Of­fice for Na­tional Statis­tics has brought sev­eral sec­tors – in­clud­ing the UK’s strong char­i­ta­ble sec­tor – into line with Euro­pean norms.

As a re­sult of the re­cal­cu­la­tion, £74 bln (EUR 94 bln) was added to Bri­tain’s mea­sured gross na­tional in­come (GNI) in 2013.

In a state­ment to Par­lia­ment in West­min­ster Cameron re­peated ear­lier com­plaints that the pay­ment was “not ac­cept­able”, and said he had the support of Greece, Italy, Malta, the Nether­lands “and oth­ers”.

“We are not pay­ing on 1 De­cem­ber and we are not pay­ing a sum any­thing like that,” he told MPs in London dur­ing a state­ment on last week’s EU sum­mit.

“We will chal­lenge this any way pos­si­ble. We will crawl through this with ex­haus­tive de­tail,” he said, adding that “to use Bri­tish un­der­state­ment, this has not en­hanced the po­si­tion of the EU in the UK.”

The leader of the op­po­si­tion Labour Party, Ed Miliband, said that the Com­mis­sion’s han­dling of the sur­charge was “cack­handed and un­ac­cept­able”, but ac­cused Cameron of neg­li­gence for not deal­ing with the prob­lem ear­lier.

“He is asleep at the wheel and the Bri­tish peo­ple are pay­ing the price,” Miliband told UK MPs.

PAN­DORA’S BOX

In Brussels, the EU Bud­get Com­mis­sioner Jacek Do­minik told jour­nal­ists he was “sur­prised by the re­ac­tion” in Bri­tain be­cause “up to this mo­ment there was no sin­gle sig­nal from the UK ad­min­is­tra­tion that they had prob­lems with this fig­ure.”

There was “no pos­si­bil­ity” un­der cur­rent EU rules to give Bri­tain more time to pay the bill. A change to the law would

PO­LIT­I­CAL UN­REST

need support from a qual­i­fied majority from EU gov­ern­ments and this would be “ex­tremely dif­fi­cult”, Do­minik said.

Do­minik said that Cameron would be in line to re­ceive an in­creased UK bud­get re­bate next year aris­ing from the same UK GNI in­creases. “So, I think that would be ex­tremely dif­fi­cult to ex­plain to mem­ber states, why on Mon­day you like this data and on Tues­day you don’t like it,” the bud­get com­mis­sioner said, adding: “If you open this act for fu­ture ne­go­ti­a­tions, you open up a Pan­dora’s box.”

He warned that, if the money was not paid by 1 De­cem­ber, the Euro­pean Com­mis­sion would send the UK gov­ern­ment a let­ter ask­ing for rea­sons for the de­lay. There would “be a mo­ment (if no re­sponse is de­liv­ered) that the Com­mis­sion will start im­pos­ing late… fines”.

If Cameron car­ries through his pledge not to pay the bill, and if it has not been re­duces by the amending bud­get, the UK faces a puni­tive in­ter­est pay­ment of around 2.5% of the to­tal bill ris­ing to 5.5% per an­num if it re­mained un­paid after one year.

EUR 2.1 bln is equal to a fifth of the UK’s an­nual trans­fer to Brussels. Other coun­tries, such as Ger­many, and France – which has strug­gled to bal­ance its bud­gets – will get re­bates un­der the plans. An emer­gency meet­ing of EU fi­nance min­is­ters will be held on 7 Novem­ber to dis­cuss the bill.

The row takes place against a tense back­ground with a high pro­file by-elec­tion next month that will be scru­ti­nised for ev­i­dence of ris­ing Euroscep­ti­cism since tra­di­tional Con­ser­va­tive vot­ers are likely to move over to the more hard­line Euroscep­tic U.K. In­de­pen­dence Party (UKIP).

A vic­tory for UKIP will up pres­sure on Cameron to toughen his stance on the EU in the run-up to next year’s gen­eral elec­tion in May. The Tory leader has promised a ref­er­en­dum on the UK’s EU mem­ber­ship in 2017, if the Con­ser­va­tives are elected

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