Britain and the European Union will face a major problem if finance ministers fail to find an acceptable compromise over the EU’s demand that Britain pay a €2.1bn (£1.7bn) budget surcharge by 1 December, David Cameron has said.
“Let me be clear: We will not be paying €2bn on December 1, nor will we be paying anything like that amount,” the prime minister said on Friday as the ministers were meeting in Brussels. “There are discussions about this at Ecofin [economic and financial affairs council] in Brussels. If these two conditions are satisfied, we will be able to make progress. If not, we’ll have a major problem.”
Cameron was speaking at the end of a conference of eight Nordic and Baltic countries plus the UK, hosted in Helsinki by the Finnish prime minister, Alexander Stubb.
He added: “I think what has been so difficult this time is the scale of the payment that was asked, not just from Britain but from some other countries as well, and that’s why I think it was right to say this money shouldn’t be paid on December 1 and, as I’ve said, we won’t be paying anything like that amount.”
Offering limited support, Stubb criticised the way Brussels had issued the surcharge demand, but said there was no doubt that countries had to pay.
“Finland, Denmark, Sweden – and actually Norway – are net contributors to the European Union’s budget. We all accept that we have to pay, there’s no doubt about that. I think this was a case of communication gone completely sour and haywire by Brussels.”
Stubb said Brussels had been ill-advised “to present a prime minister, be it David Cameron or any other, with a fait accompli to pay €2.1bn out of the blue and tell him to pay by December”.
As he arrived at the finance minister’s meeting, the British chancellor, George Osborne, insisted he would negotiate a better deal.
The £1.7bn surcharge resulted from a European commission recalculation of the UK’s gross national income (GNI) based on figures provided by the Office for National Statistics which took greater account of areas of economic activity such as the charitable sector. The demand for the new payment was leaked at a summit of EU leaders in Brussels last month, prompting a furious response from Cameron.
Osborne said: “The demand that Britain pays £1.7bn on 1 December is unacceptable. I wanted that discussed at this meeting of European finance ministers. I wanted it on the agenda. It is on the agenda. I will make sure we get a better deal for Britain.”
Osborne is expected to call on finance ministers to agree to review the system which led to the reassessment of Britain’s GNI figures. Britain wants the European commission to ensure that the reassessment of the strength of various sectors of the economy was applied equally to all 28 member states.
Fellow EU leaders are suggesting that Britain, which has enjoyed a generous EU rebate for the past 30 years, needs to respect the rules, though there is some sympathy.
Stubb said earlier: “Remember the EU’s total budget for seven years is €1tn. This is basically a payment which dates back to 1995 so one could make calculations – well how much has the UK regained from the rebate? My message to everyone – Finn, Swede or Brit alike – the EU is not an accounting exercise. But these types of whacks of €2.1bn – I fully understand why it has become a problem.”
Jakub Adamowicz, the commission’s budget spokesperson, told the BBC Radio 4 Today programme: “Britain has decided to adopt this standard that has triggered this sum only this year. Britain could have adopted this accounting standard with a GNI adjustment a lot earlier. If now all those payments kick in retrospectively from 1995 this is an issue which is for us, the European commission, a normal procedure. We, in our budget planning, have this exercise every year – the GNI adjustment. This is nothing new in 2014. This has been happening before.”
Kenneth Clarke said he had confidence in Osborne as a negotiator. But he largely endorsed the commission’s view that the demand for the extra payment came from a British review of the understatement of the size of the British economy in recent years.
The former Tory chancellor told Today: “The figures are based on what British officials came up with about the understatement of our GDP over recent years … We’ve been doing this for years and the British always take the money back when it comes to our advantage.
“The ones who have missed out this time – we sometimes gain – are the United Kingdom and Italy. This isn’t Argentina, we aren’t governments who default on our debts, but we are perfectly entitled to start arguing about how the debt is arrived at and how it is paid.
“Had we come out as gainers and had the Germans had to pay a large sum of money and had some Germans said to us: ‘No, no, no, we don’t like the result now. We supported this … method but we didn’t know we’d lose, so we are not paying’, then the Eurosceptics in the media and parliament here would have gone absolutely apoplectic.
“I normally believe [that] in a sane world common sense eventually prevails and I’ve always thought from the word go that a lot of this anger is synthetic and politics is getting in the way of common sense. If you want to keep the EU intact as an economic entity you have to pay your contribution, you have to have free movement of labour.”
