Britain's new Tory chancellor demands EU budget freeze

18th May 2010, Comments 0 comments

In a classic echo of Thatcherite euroscepticism, Britain's Tories marched back into Brussels after a 13-year absence on Tuesday and demanded a total freeze on the European Union's budget.

Turning the tables on European calls for national austerity, Conservative finance minister George Osborne told his new partners it was "unacceptable" for Brussels to demand a six percent increase in its 2011 budget at a time of crisis and belt-tightening in national economies.

"I put to (fellow ministers) that there should be a cash freeze for 2011 in the budget, given what many member states are having to do," the chancellor of the exchequer told reporters on his first day representing the new British coalition government in Europe.

"I was not alone... in saying that this was unacceptable, that many, many member states are having to accept public expenditure restraint and indeed cuts in administration costs," he stressed, referring notably to Greece, Spain and Portugal.

It was not the only topic on which Osborne crossed swords with the EU Commission as he set out his stall on behalf of Britain's new Conservative-Liberal Democrat coalition government.

Osborne also rejected an EU plan to preview and assess national budgets, saying there was no question of supplanting the role of parliaments.

"I made it absolutely clear, as did several other people around the table, that there was no question of in any way supplanting the role of national parliaments," he said.

However, he had to cede ground elsewhere as Europe agreed on the need for "strict" new curbs on the trillion-dollar hedge fund industry, despite stiff British resistance.

Britain, home to 80 percent of Europe's hedge fund industry, has fought for months to ensure that funds based in Commonwealth outposts in the Caribbean, for example, but managed in the City of London, be able to sell to all of Europe's half-a-billion population on the strength of British regulations alone.

"That's the way it goes in Europe, sometimes there are decisions that go against a single member state," German Finance Minister Wolfgang Schaeuble said.

Osborne said he had been given "something of a hospital pass" by Labour predecessor Alistair Darling with which to negotiate, but that he had "got the reservations of the UK noted."

But on the EU budget he was unwavering, stressing that the commission's proposal to increase the 27-nation bloc's joint budget for next year by "six percent, including a 4.5 percent increase in administration costs," had triggered "a lively discussion."

Such an increase would translate into a 600-million-pound increase in Britain's gross contribution to EU coffers, he calculated.

Osborne said he discovered allies in France and Sweden in particular, and cited with intense irony "quite an interesting moment when the Greek finance minister was explaining to the commission the importance of European budget restraint."

The planned 2011 budget, worth 142.6 billion euros (176.4 billion dollars), foresees a 4.5 percent increase in administrative costs for EU institutions, including 2.9 percent for the commission itself.

The EU and its European member governments are already engaged in a tussle over mooted salary hikes for some 50,000 European functionaries, which was referred to the European Court of Justice in Luxembourg following strikes around Christmas.

Osborne claimed it "was very important for me to show today that the Conservative government, in coalition with the Liberal Democrats, is going to engage positively in the issues that the European Union is looking at."

He said he would do that "constructively, but be very clear about the British national interest."

Commission spokesman on budgetary issues Patrizio Fiorilli told AFP that the planks of the EU's reforming Lisbon Treaty, which came into force last December required the creation of new jobs, after a string of diplomats criticised the planned increase ahead of its presentation to the ministers.

Some 64.4 billion euros are for actions linked to securing Europe's economic recovery -- a rise of 3.4 percent over this year, the commission spokesman said.

© 2010 AFP

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