Sex, drugs and the EU budget

Robert Peston
Economics editor

image copyrightThinkstock

The good news is that the UK economy performed a bit better than we thought.

The bad news is that the UK performed better than we thought in recent years.

Because of that, Brussels thinks we owe it 2.1bn euros (£1.7bn) - having calculated that our EU budget contributions have been based on an understatement of the size of our economy.

How is it that our EU subs are supposedly in arrears?

Well you may recall that the Office for National Statistics recently recalculated the size of our national income to take account of unreported or under-reported parts of the economy, such as research and development, illicit drugs and prostitution.

So thanks in part to the inclusion in the official economy of our productive sex workers, our EU membership fee has been augmented.

Now to be absolutely clear, none of this is a surprise to the Treasury or chancellor. British officials have known for some time that the inflammatory demand from Brussels was coming.

What did catch them by surprise was what it sees as a deliberate leak by EU officials of the news last night - which they see as an attempt to embarrass David Cameron, as he meets other EU leaders to discuss, among other things, his controversial hopes of being able to restrict migration of EU nationals to Britain.

The hope of Cameron and George Osborne is they can build an alliance of other penalised countries to somehow stymie the formula-based demand for budgetary top-ups.

Potential allies include the Netherlands, which had been asked for 643m euros (£508m) and - perhaps hilariously - Greece, which is said by Brussels to owe 89.4m euros (£71m).

The idea that Greece is in better shape than we thought is slightly counter-intuitive (ahem).

At least Brussels cannot be accused of attempting to bribe Greek voters to become better disposed towards the EU, ahead of elections in which anti-eurozone parties are expected to perform well.

By the way, some will also detect a eurocrat sense of humour in the calculation that the EU's most fearsome economy Germany deserves a rebate of 779m euros (£615m), but that stagnating Italy - desperately struggling to meet EU fiscal or domestic budgetary targets - owes 340m euros (£268m).

Of course in the overall scale of domestic public spending, these sums are tiny.

But as a contributor to the popular view of whether Brussels is fair and competent, they are massive.