Cameron talks tough in EU budget battle

Rumour has it that Brussels is prepared to give more leeway than we’ve been expected on the EU budget, and today the PM has vowed to turn up at the conference fighting for a ‘tough but realistic’ agreement on it. His first meeting this morning will be with the EU president, Herman Van Rompuy, who has proposed to cut EU spending, but to reduce the value of the UK’s annual rebate. Let’s hope no tempers flare.

Speaking to journalists as he arrived at the EU’s main building in Brussels, Cameron said: ‘These are very important negotiations. Clearly at a time when we are making difficult decisions at home over public spending it would be quite wrong – it is quite wrong – for there to be proposals for this extra spending in the EU.’ He added: ‘So we are going to be negotiating very hard for a good deal for Britain’s taxpayers, for Europe’s taxpayers, and to keep the British rebate.’ Tough talk – but he’s painted into a corner. 

For those who have forgotten (or were not around at the time), the British rebate was a hard-won agreement under Margaret Thatcher. It was originally sanctioned because at the time, the vast majority of EU (then European Economic Community) money was spent on the Common Agricultural Policy. Thatcher argued that because Britain has one of the smallest farming sectors in Europe as a proportion of its GDP, then this money disproportionately benefited other member states. In other words, the UK receives much less in farming subsidies than the other members. Today the rebate is worth £3.5bn per year to the UK.

Cameron’s problem is that he wants to see a budget cut to appease many in his party – after all, we’re having to cut budgets left, right and centre in the UK – but will be lucky if the EU agrees to a freeze. Critics in the UK have pointed out that even if van Rompuy’s deal went through, to cut the rebate would effectively mean UK taxpayers contributing £6bn more to the EU despite the overall budget falling.

Cameron has shot his own fox as a result of very inept euro-negotiations, and doesn't really have much of a position to work from, so he will be relying on other budget hardliners like Finland to help him out. Still, all we can go on at the moment is that Cameron sees a budget increase as ‘unacceptable’. Whether rhetoric becomes action remains to be seen. We’ll keep you posted.

This article was first published on managementtoday.co.uk