Richard North, 08/07/2004  

Despite the fact that the UK retains a veto over setting the EU budget, the Commission is determined to remove the British rebate, worth up to £5 billion a year.

The Commission proposals - not due to be released until next week but leaked yesterday - would turn the UK into the biggest net contributor to the EU budget, paying 50 percent more than France. This takes into account a Eurostat calculation that Britain last year was the richest of the net contributors with a Gross National Income at 111.2 percent of the EU-15 average.

As predicted by this Blog, to replace the rebate, Michaele Schreyer, EU budget commissioner, is pushing the idea of replacing the British rebate with a "generalised correction mechanism" for all big net contributors. He is seeking to stave off increasing concern in Germany, the Netherlands and even Sweden at the increasing costs of financing the EU.

Any member state which made a net payment more than 0.35 percent of GNI Income would be eligible to a rebate of two-thirds of funds paid above that level, with a cap at 7.5 billion euro a year.

Needless to say, Blair will be opposing this idea and Kinnock and Patten have already weighed in with their support.

However, with the Commission refusing to back down, there looks set to be a mighty battle in the offing, which could have serious repercussions for Blair’s EU referendum as the issue may well come to a head at the height of the campaign.

In stoking up the rebate row, however, it almost make you wonder whether the Commission wants to see Britain deliver a "no" vote, perhaps as a means of getting rid of the foremost member of the awkward squad.

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