EU budget: Another battle looms

German Chancellor Angela Merkel (r) and Spanish Prime Minister Mariano Rajoy Speaking the same language? The Germans predict the talks will be both difficult and divisive

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Last November, when Europe's leaders first discussed their long-term budget, French President Hollande said there was only 30bn euros (£25.9bn, $40.59bn) separating them. Some diplomatic sources in Brussels say a deal was close last year and could have been achieved.

That was then. The mood now remains cautiously optimistic but the Germans, who like to downplay expectations ahead of summits, are saying the talks will be "difficult and divisive".

UK Prime Minister David Cameron is seen as the leader of the lean brigade - those countries that believe EU spending has to be reined in at a time of austerity.

Britain is not isolated. It has allies in countries like the Netherlands, Sweden and Germany.

The EU Commission had wanted a 5% increase that would have delivered a budget of 1.033tn euros - that's more than a trillion over seven years. That was trimmed back in November to 973bn euros.

Britain and Germany and others are seeking yet further reductions. If savings of an extra 20bn euros were found then the UK would be able to claim it amounted to a cut based on the budget for 2012.

Everything is made more complicated by the fact that Britain bases its calculations on the payments it has to make, whilst others work on the basis of spending commitments - that is, maximum ceilings.

Even so, Herman Van Rompuy - the official who will chair the summit - has said that "for the first time ever - there will be a real-terms cut compared to the current budget".

Mr Cameron and German Chancellor Angela Merkel spoke on the phone at the weekend.

Afterwards, Downing Street said that both leaders agreed that the 973bn-euro proposal had to be reduced further.

Different agendas

One strange feature of this summit is that Mr Van Rompuy won't circulate his new proposal until Thursday afternoon, when all the heads of government are sitting around the table. This excludes pre-summit manoeuvring, but it could also spark arguments.

German officials were warning on Wednesday that Germany would not simply open its chequebook to solve the budget talks. But Germany will be looking for compromise and Angela Merkel is meeting on Wednesday evening with French President Francois Hollande, who has been sharply critical of more cuts.

Mr Hollande will resist any moves that undermine projects that, in his view, enhance growth.

Yet there is reason to believe French objections will be muted. Last November, France scored a significant victory.

The British, Swedish and Dutch agreed not to seek further cuts in the Common Agricultural Policy or the funding for poorer regions. That changed the atmosphere.

The British still feel agriculture and its funding needs further reform, but they will not make agricultural funding an issue at this summit.

Rebate debate

As always there are many different agendas. Some of the poorer eastern countries, which do well from EU grants, will fight to preserve those programmes.

There are several countries determined to protect their rebates or to qualify for a rebate. The Danes are looking for a significant reduction in their contribution.

The Italian Prime Minister Mario Monti believes Italy is paying too much and has turned his critical eye on the British rebate.

The British have made it clear that their rebate - worth £3bn a year - is non-negotiable.

Almost certainly the summit will demand further cuts in the cost of EU administration. Not only the British, but Dutch and German papers have been examining the pay and perks of the EU's civil servants and commissioners - some of whom earn more than their respective heads of government.

One final thought worth remembering - whatever is agreed has to go to the European Parliament and the MEPs are not just determined to flex their muscles, they are big backers of EU spending.

So even beyond the summit there may be battles ahead.

Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this

    Comment number 71.

    At summit of Europe?

    If 'even the best' - in banking, business, p'service, 'even in politics' - cannot save selves from 'perversity' in outcome from 'incentives', the case is made ever clearer for equal partnership, the essential basis for meaningful democracy

    Rather than squander our inheritance, our degrees of wealth, our freedom from overtly oppressive policing, we owe our children progress

  • rate this

    Comment number 70.

    59/62 mh, austriacus

    Amazing world exclusive - Marta Andreasen in public spat with Nigel Farage! Like thats never happened before...

  • rate this

    Comment number 69.

    "Britain has allies"

    Forced, in pandering to cries of greed & ignorance, fanning hypocritical indignation in face of outcomes from democratic deficit & mass social exclusion

    As in 2010 'more austerity' electioneering, populist cry for EU cut-back will leave poor, individuals & countries, further harmed

    Room to appear 'realistic peace-maker', reining 'more extreme': but wilful neglect culpable

  • rate this

    Comment number 68.

    #61 - Margie. If you think you'll get better treatment from the Chinese Army or Indian Railways than the NHS you are welcome to join them! hahahahahahahah

  • rate this

    Comment number 67.

    The EU is the biggest FRAUD of the CENTURY ! ... The whole EU Commission is a complete farce and sham. Who gave those people at the EU Commission in Brussels, sipping their expensive champagne and eating caviar, the right to make decisions over all us Citizens of Europe??

  • rate this

    Comment number 66.

    I'm getting sick of seeing such vast amounts of money being thrown about by such people who seem to treat it as so much loose change. It is the hard earned money of the tax paying people and businesses of the countries in the EU. It is our money they want to spend and I appear to have little or no say as to what it is spent on. Am I alone in feeling so disenfranchised or are there 450m like me?

  • rate this

    Comment number 65.

    Any failings of UKIP and its members are small compared with the failings of those who got themselves elected by promising us a referendum and then didn't give us one and the "EU"-lovers who fail to see that anything is wrong with that.

  • rate this

    Comment number 64.

    On the subject of governments spending money, there is another article on the BBC concerning an apparently extensive government report that advises that the UK could survive a massive solar storm.

    So, how much did that cost? Isn't it nice news, given that nothing could be done had the threat of solar storms been real?

    And News Corp made a big profit. At least Murdoch serves his constituents!

  • rate this

    Comment number 63.

    And the party rolls on.

    Europe is getting to be a place where party members party on borrowed money, and natural borns fools go to work in order to pay taxes to pay for the party.

    I guess that equation is what drives decadence in a society. Young people watch the news and they learn that suckers and fools work hard, and that cheats and liars get the big money.

    The EU party is a disgrace.

  • rate this

    Comment number 62.

    59 austria

    A senior member of the UK Independence Party has threatened to quit after accusing leader Nigel Farage of being a "Stalinist dictator" and "anti-women"

    Ms Andreasen is the party's sole remaining female MEP, after Nikki Sinclaire was expelled from UKIP in 2010
    Can they afford to lose any more?

  • rate this

    Comment number 61.

    38 QOT

    "Police military local govt NHS etc excluded"

    It is said the NHS is the third biggest employer in the world after the Chinese army and the Indian railways.

    We would be grateful if we we were getting even the third best service. That's far from our experience. The same goes for schools. If you want the best for your child you must go private and pay.

    So much for equality

  • rate this

    Comment number 60.

    56. Chris London
    I would like to see all the EU Bureaucrats elected instead of them just being appointed, cronyism at its best......"

    I am sceptical because being elected is no guarantee for quality.
    Austrian elected MEPs : up till now the Greens have showed most attention for the needs of the average people. The others are mostly career politicians, like Karas, Swoboda, ..

  • rate this

    Comment number 59.

    39. Phffft
    '37. sieuarlu
    "How do I get to be a Eurocrat so I can ride that gravy train too?"
    Being a communist might help'

    This may also work:
    A senior member of the UK Independence Party has threatened to quit after accusing leader Nigel Farage of being a "Stalinist dictator" and "anti-women"

  • rate this

    Comment number 58.

    For all the optimism you hear, see in the media what of fundamental significance changed for the EU since the Greek crisis broke? Nothing, they just keep moving the pea from one shell to another. The banks, the govts, private pension funds, it's still there.Europe isn't any more competitive, its way of life just as unviable as ever.Unemployment worse, prospects bleak.Does the UK want in or out?

  • Comment number 57.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 56.

    I would like to see all the EU Bureaucrats elected instead of them just being appointed, cronyism at its best......

    Lets face it the vast majority we currentley have would not get a sniff.

  • Comment number 55.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 54.


    I would like a Brit like Blair to become the first elected EU president.
    This would remove a lot of doubts.

  • rate this

    Comment number 53.

    43While money spent on perks may be only a small part of the EU budget, how do you justify a supposedly democratic institution that nations can opt out of if the people who work in it are funded to live like royalty while citizens in those countries are seeing their economy, pensions, life savings, jobs, everything they were promised destroyed before their eyes by these same people.This can't last

  • rate this

    Comment number 52.

    49 quiet

    "Do we have to waste contributions and 10 minutes correcting you ?"

    Definitely a waste seeing as you didn't actually correct me on anything.


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