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European Union Budget

The EU Council of Ministers is discussing the European Commission’s budget for the next 7 years: 2014-2020 this weekend. The UK is one of the biggest contributors, along with Germany, France and Italy. 

The Commission has asked for a 5% increase in the budget that would take it to more than 1 trillion euros over the 7 years. David Cameron planned to argue for a budget freeze but Parliament voted for a cut in the EU budget in light of the austerity member states are experiencing. Germany, the biggest contributor, has sympathy with Cameron’s idea of a freeze but other member states do not because they are major beneficiaries from EU hand outs.

The French President favours an increase in the budget to protect Common Agriculture Policy payments to French farmers, but he will also argue for Britain’s 3.6 billion Euro rebate to be abolished, which would make Britain the biggest contributor. EU President, Herman Van Rompuy has backed Cameron’s call for a freeze but wants the UK to accept a cut in the rebate. David Cameron will veto that proposal and any budget increase but he will be in a minority because the UK’s contribution is a much smaller percentage of our national income than that of most other, poorer member states. Britain contributes more to the EU than it receives but membership gives access to European markets worth billions. Arguments about British membership have to factor in possible lost sales and jobs resulting from leaving the EU’s common market. It is this that most concerns the Prime Minister.

What does the European Commission spend this money on? The Common Agriculture Policy is one of the bigger budget items, accounting for 55 billion Euros. The Common Fisheries Policy is another. Like the UK, the EU gives development aid to poorer countries around the world as well as Europe’s poorest regions and funds a diplomatic service headed by Baroness Ashton. Grants also go to encourage economic growth, employment and scientific research. The cost of running the institutions of the EU is also in the budget, but this is not the vast bureaucracy some people think. The European Commission is no bigger than one UK Government department.

The meeting is expected to last 3 days and the negotiations will call for all Mr Cameron’s diplomatic skills. If no budget is agreed this weekend there will presumably be a further attempt in the New Year. Ultimately, if there is no agreement by April, the current budget will be rolled on month by month, meaning that there will be no cut in real terms that the Westminster Parliament expects. Mr Cameron is between a rock and a hard place. Eurosceptic MPs are calling for Britain to leave the EU. The Labour Opposition does not want that but does want the Government to be discredited in the electorate’s eyes. European leaders will blame Mr Cameron if he vetoes any agreement. Party politics aside, he needs our prayers.