EU chief wants British rebate replaced with lump sum

3rd July 2011, Comments 0 comments

European Commission President Jose Manuel Barroso said Sunday he wants to replace Britain's EU budget rebate with an up-front lump sum.

Barroso said that "almost nobody" understands the current system and it was time to "go back to the original principles" behind the 1984 deal, in an article in The Sunday Times newspaper.

"Over the last 30 years the UK rebate has dominated EU budget negotiations," the Portuguese wrote.

He said the deal was based on the stance that any member state sustaining an excessive budgetary burden in relation to its prosperity "may benefit from a correction at the appropriate time".

"The new system we are proposing, based on a lump-sum reimbursement, would mean that Britain would be entitled to receive a gross amount of 25.2 billion euros ($40.5 billion) from 2014-2020."

British Prime Minister David Cameron's government is battling to rein in a record budget deficit. The lump sum would come in the year ahead of the scheduled 2015 general election, The Sunday Times said.

British Treasury figures put its rebate for the 2010 calendar year at 3.1 billion pounds ($5 billion, 3.4 billion euros) and about 26 billion pounds for the 2007-2013 budget cycle as a whole.

The so-called "Thatcher rebate" returns billions of euros annually to Britain in place of farm payments to France and Germany.

A Treasury spokesman said: "Britain's rebate is fully justified and we are not going to give way on it."

The then prime minister Margaret Thatcher was infamously caricatured as clobbering fellow EU leaders with her handbag when she won the concession in 1984.

The EU budget is run on the basis of a mutual fund rather than on closely-measured balancing of amounts contributed and amounts received under various funding programmes.

But Thatcher said she wanted her money back, making use of an understanding when Britain joined the then European Economic Community that it would be able to re-open calculation of its contributions if they became severely skewed, mainly due to the particular structure of British agriculture compared with France and Germany.

Her eventually successful campaign was long and caused much bad feeling.

© 2011 AFP

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