Monday, November 19th 2012 - 11:50 UTC

EU on collision course over long-term trillion Euro budget

European Union looks set for a new round of clashes this week as an extraordinary summit called to agree a long-term trillion-Euro budget heads for an ugly showdown, possibly even failure.

PM Cameron wants to cut 200bn Euros, but France, Italy and Spain will not yield one Euro on farm subsidies

Already weakened by three years of economic crisis, the 27-nation bloc of half a billion people faces new battle at the two-day summit starting Thursday after weeks of talks that have exposed stark divisions between pro and anti austerity nations, as well as between the haves and have-nots.

“It's a lose/lose summit,” said a senior EU diplomat. “Absolutely no one will leave this summit content if by chance we reach a solution”.

“We don't exclude a breakdown” told the media on condition of anonymity.

Europe's leaders begin the talks on the EU next seven-year budget on Thursday, with Britain's premier David Cameron in the role of leading spoiler though most governments are putting national interest well above shared concerns.

“Cameron will come with a big knife to get spending cuts and to defend the British rebate,” said an EU diplomat.

In the face of Britain's austerity-minded determination to secure a cut of up to 200 billion Euros in the 2014-2020 budget, EU President Herman Van Rompuy, who will broker the talks, last week suggested a 75-billion-Euro cut to the proposed 1.047-trillion-Euro budget.

But that made no one happy. Spain said it would lose 20 billion Euros of EU aid, Italy complained of losing 10 billion Euros.

The three are among the 11 net contributors to the EU budget who in times of economic strain and domestic cutbacks are tired of bearing the brunt of the financial burden.

Eight of the net contributors — Austria, Britain, Denmark, France, Finland, Germany, the Netherlands and Sweden — have banded together to demand spending cuts, though they are far from being on the same page on what should go or by how much.

France for instance, along with Italy, is refusing any decreases whatsoever in the budget's biggest item: subsidies paid to farmers, big and small.

“There can be no question of withdrawing even 1 Euro from the Common Agricultural Policy (CAP),” said French Premier Jean-Marc Ayrault, whose government is pushing for the EU to raise new revenues through new taxes, such as one on financial transactions.

In the other corner are 15 nations from Europe's east and southern fringe who are net recipients, most often of the so-called “cohesion funds” used to help poor regions catch up economically and socially with the rest. This is the second biggest budget item after the CAP.

Chaired by Poland and Portugal, the group includes Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia — and most recently, once mighty Spain.

Cameron, who is under intense Euro sceptic pressure among his Conservative party to wrest an agreement in Brussels, has been shuttling back and forth to raise support, travelling to the Netherlands, Italy and Germany in search of allies.

Chancellor Angela Merkel of Germany, which is the biggest contributor to the EU budget, has promised to do her utmost to ensure the summit would not end in collapse.

“Even if we are net contributors and people could perhaps think that we can live with a non-agreement, that is not our goal,” Merkel said. “We want an agreement and we will talk exactly in this spirit with all countries”.

17 comments Feed

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1 Idlehands (#) Nov 19th, 2012 - 12:10 pm Report abuse
I hope these talks do fail.

France has said “not a single Euro off the CAP” and yet the CAP is the most ridiculous antiquated protectionist policy of the entire EU and is simply a subsidy to French farmers. Furthermore their hopes to get it paid for by a new transaction tax are simply a way to get London and Frankfurt to pay for any additional EU spending on French protectionism.

The EU has gone from a daft idea to a total disaster in the last 20 years but it seems nobody is prepared to point out that fact for fear of taking the blame should it lead to it's demise.

The EU doesn't need to be anything more than a trading block. Europe is politically and culturally too diverse to be anything else
2 Room101 (#) Nov 19th, 2012 - 01:15 pm Report abuse
We just have to wait and see: what is speculatively published before these talks take place probably will bear little relation to what transpires.
3 Idlehands (#) Nov 19th, 2012 - 02:04 pm Report abuse
The real prblem is that if no 7 year deal is agreed then the EU has the power to set an annual budget by simple majority voting.

Veto power can then be ignored.
4 Conqueror (#) Nov 19th, 2012 - 04:08 pm Report abuse
However, “We're not paying that” can't be ignored. The UK Parliament wants to see cuts. The present UK contribution is more than £19.855 billion gross. £10.78 billion net. A 5% cut would represent around £1 billion. But the UK Parliament wants to see a cut in the budget, not just in the UK contribution. So a 5% cut in the actual budget could bring it down to €994.65 billion. Much more realistic. Perhaps if the eurocrats started by not sneaking any more increases in their salaries and expenses. And then went on to get their accounts properly audited. There's no excuse for an organisation of this size not to have had its accounts satisfactorily for 18 years.

But, with any luck, this situation may be resolved by the UK leaving the EU. £10.78 billion better off “at a stroke”!
5 Anbar (#) Nov 19th, 2012 - 06:21 pm Report abuse
Ah, isnt it lovely to see a United Europe... with our freely elected President...

Oh! I've got an idea!

Save money by sacking all the bureaucrats that nobody elected...

ah.. minor problem... Belgian & Luxembourg would suffer 90% unemployment....

ah, fugem...


“”“”The EU has gone from a daft idea to a total disaster in the last 20 years but it seems nobody is prepared to point out that fact for fear of taking the blame should it lead to it's demise.“”“”

That's not entirely true, parts of it work very well: such as keeping thousands of unelected bureaucrats employed employing more unelected bureaucrats to keep the other unelected bureaucrats in jobs.

oh, and subsidising French farming and Spanish fishing (mostly in UK waters...maybe that's why they keep popping up in Gibraltar waters?)
6 Pugol-H (#) Nov 19th, 2012 - 06:38 pm Report abuse
Even by the standard of EU budget meetings, this has precious little chance of reaching an agreement.

Ultimately it will be a case of “he who pays the piper” that gets their own way, something the Polish government seems to have completely forgotten.

The difference this time round, several other net contributor countries are prepared to veto if their red lines are crossed.

Of particular interest is the Danish demand no less, for a rebate, which if successful could collapse the CAP by itself, if not, the rush of other countries wanting one would.

@3 Idlehands
Not sure it’s quite as straight forward as that, I seem to recall an “inflation rate increase only” being involved somewhere.

However if not, then it could be the trigger for a British referendum.

Then the net recipient countries would have the fun of drawing up a new EU budget with the net contributor nations, less the money from the second biggest contributor.

They think their hard done by now, austerity anyone, or rather austerity for everyone still in the EU.
7 Ayayay (#) Nov 19th, 2012 - 07:23 pm Report abuse
United Northern Europe, United Southern Europe, done.
8 briton (#) Nov 19th, 2012 - 07:44 pm Report abuse
Sod em,
The sooner we get out the better,
And Cameron will be forced to give us that bloody referendum he promised,
And sod the ECHR trying to tell us to give criminals the vote,
Cameron has a lot to do
So the sooner he keeps saying NO the better.

9 toooldtodieyoung (#) Nov 19th, 2012 - 08:33 pm Report abuse
8 briton

I've been saying this for years!!

Get us out of europe!! It's too old, too corrupt and too full of Commie pinko, leftyist cry baby- do gooders.

There is no place for a non-corrupt nation like the UK, in such a fetid, stinking toilet like Brussels.

If Came-moron is brave enough, and has ANY political sense, will will give us a referendum and then act on the outcome. In the current climate, only a fool would vote to keep us in Europe.
10 Ayayay (#) Nov 19th, 2012 - 09:44 pm Report abuse
Yep, @9 ALL the Euro-affiliated states need to have that referendum. That way some ppl (Spain, Greece can say no to austerity (& new loans), & others can say no to paying for them.
11 Burn1938 (#) Nov 19th, 2012 - 09:47 pm Report abuse
I will admit that I was never convinced that it was a good idea to join the European Common Market . However the situation is now ridiculous . All countries are cutting expenditure but those who run Europe want an expenditure increase of 7 and 5 percent over the next five years . They are mad .
12 British_Kirchnerist (#) Nov 20th, 2012 - 12:03 am Report abuse
Austerity isn't working
13 Ayayay (#) Nov 20th, 2012 - 12:32 am Report abuse
Well noone is going to give them more free money, so countries in austerity (N Europe is in GROWTH)may have to SAY NO to LOANS and return to their own currency they can devalue.
14 Marcos Alejandro (#) Nov 20th, 2012 - 04:49 am Report abuse
9 toooldtodieyoung “Get us out of europe!!”
15 Trunce (#) Nov 20th, 2012 - 08:59 am Report abuse
The grouping UK should be part of is EFTA, brought into being in 1960.

Free Trade but not political or monitory union.
16 Anbar (#) Nov 20th, 2012 - 07:01 pm Report abuse
@12 British_Kirchnerist “”“Austerity isn't working”“””

/random platitude
17 briton (#) Nov 21st, 2012 - 12:40 pm Report abuse
yes i agree,
the sooner we get out the better.

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