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Thursday, June 30, 2011

The Good, The Bad And The Ugly

The EU's "Super Wednesday", which we followed live on our blog, ended with the Commission unveiling its blueprint for the next seven-year EU budget, running from 2014 to 2020. We published our response earlier this afternoon, outlining "the good, the bad and the ugly" of the Commission's proposal. Here are a couple of interesting aspects we've flagged up:
  • Frustratingly, the Commission has not published any figures comparing overall EU expenditure under its new proposal with the previous budget period, making a comparison very difficult. This is clearly another step backwards for transparency in Europe. But what's clear is that the Commission has once again chosen to ignore the demands for self-restraint coming from across Europe. Despite the UK, France, Germany and others calling for a cash freeze in the next long-term EU budget, Barroso & co. have proposed an inflation-busting 5% increase from the current budget period, with total commitments reaching over €1 trillion;
  • On top of this, the Commission has earmarked an extra €58 billion to finance a number of projects and funds which are off the main balance sheet and are not considered as part of the main budget (which include large scale projects that were previously part of the main budget such as ITER and GMES). Once this additional cash is factored in, the total increase to EU expenditure is at least 7% (the UK Treasury suggests a 10% overall increase - the difference is down to different baseline numbers). In other words, the Commission is trying to spin the increase.
  • The 8% cut to agriculture spending is good news. However, farm subsidies will still account for over one third of the CAP budget with the Single Payment Scheme accounting for the bulk of the subsidies, meaning that golf clubs, multinationals, assorted royalties and other landowners will be able to cash in on EU farm subsidies well into the future (the Single Farm Payment is disbursed based on historical entitlements and land ownership, irrespective of whether the recipient is actually a farmer).
  • The Commission's blueprint leaves the mechanism for the allocations of regional funds untouched, meaning that richer member states will continue to "recycle" money between each other via Brussels. Hardly a rational policy. On the positive side, stronger conditionality will be applied to those receiving funds, while a separate €40bn fund has been created to promote transport and energy networks across Europe (an area where the EU budget clearly can add value). More money will also be spent on Research & Development, which is good.
  • Despite the Commission proposing a cut to jobs and an increase in the retirement age for EU officials (which is a positive thing), spending on bureaucracy and administration will increase from 5.7% to 6.1% share of the total budget.
  • The Commission wants to scrap the existing rebate systems in favour of new “lump sum” reductions to net contributors’ payments – it is not yet clear what economic impact this would have on the UK’s rebate. We'll no doubt return to this point.
However, by far and away the most controversial aspect of the draft budget presented yesterday is the proposal to introduce fully-fledged EU taxes, in the form of both a "financial sector tax" and a new "EU VAT". It's not yet clear how much money the Commission is planning to raise via these two brand-new EU levies. We believe that EU taxes are a non-starter: they not only lack any democratic legitimacy, but are also extremely difficult to put into practice (this is particularly true for a financial transaction tax, as we've argued here).

The Commission's proposal drew an immediate rebuke from most net contributing countries. A UK Government official called it "completely unrealistic", while Dutch Europe Minister Ben Knapen said it was "very disappointing". German Foreign Minister Guido Westerwelle chimed in adding,

"The Commission clearly exceeds the total volume of the budget which would be acceptable to the [German] government."

And his Italian counterpart Franco Frattini has made clear that Italy will seek an "indispensable" reduction in its net contribution to the EU budget over the next seven-year period.

In other words, we're in for a long, grinding negotiation round.

37 comments:

John E. Payne said...

Is it not a standard Brussels tactic to aim ridiculously high with their financial demands so they can concede and still achieve their secret target?

This allows all the EU heads of state to go back to their country and claim success with reigning in on the EU Commission. In believing the politicians negotiated a good deal, the public are more likely to withhold their resentment. This Government must follow David Cameron’s statement. ‘There must not be any increase in the EU budget, instead it should be decreased.’

John E. Payne said...

Is it not a standard Brussels tactic to aim ridiculously high with their financial demands so they can concede and still achieve their secret target?

This allows all the EU heads of state to go back to their country and claim success with reigning in on the EU Commission. In believing the politicians negotiated a good deal, the public are more likely to withhold their resentment. This Government must follow David Cameron’s statement. ‘There must not be any increase in the EU budget, instead it should be decreased.’

Rollo said...

John Payne is right, prats like Cameron will fly in waving a bit of paper saying 'peace in our time, only 3% increase this year' when we are having to cut everything else, and are having to borrow money ourselves to pay.

DerekR said...

When will people realise that the EU hierarchy have inveigled themselves into a position where it seems that nobody has the power to remove them?
They have decided that they are the rulers, and that they can demand money from the "peasants" to spend as they like - and on what they like.
It is no good for David Cameron to say that the latest demand is unrealistic. He should find out how to remove them and maybe introduce some democracy into the EU, which it is, at the moment, without.

lhlrew said...

Clearly the EU has no intention of adhering to international standards of accountancy, with proper reportings concerning whom has done what with taxpayers money, so the simple answer is for the UK to let them get on with their double-dealings and for us to take leave of the EU completely.

Frankly, as a taxpayer I no longer wish to be abused by the EU, or our government whom seem too weak to stand up to the unelected thieves in Brussels.

Norman Utton said...

David Cameron says these EU budget demands are unrealistic. Great, yet again we see Cameron spouting the words, but of course zero action. Cameron tells us it is essential that we as country get our budget deficit down, and asks us all to tighten our belts. I have no doubt that the last Labour Government left our country in a dire financial position, and clearly we do have to reduce our deficit, but what Cameron will not admit is that if he had the guts to follow the will of the majority of British voters he would take us out of the EU Treaty. This would save the UK billions and billions of pounds each and every year, and allow us to return to being a democratic country, and not be dictated to by the EU. Lets face it, it is the EU demands on countries like Greece, Italy, Spain, Eire, and others that have caused the deep financial decline of these countries. It really is about time Cameron wakes up to the fact the EU will continue to drag us down financially, but I think this pathetically weak schoolboy – Cameron, does not have the leadership guts to do what the majority of us want.

Norman Utton said...

I agree with the others that have commented on the EU Budget, but the simple truth is that Cameron is dedicated to keeping the UK in the EU. Like Labour, and the Lib Dems he does not understand the basics of a democracy. In the many polls conducted the majority of the voting public want us out of the EU Treaty. Unfortunately we no longer live in a democratic country, because we – the peasants no longer count. Our views are irrelevant. As a 70 + + year old I was brought up to believe that democracy was all important to the way a country was run, and that the will of the majority would always prevail, but Cameron, like Blair before him have completely destroyed this concept, and now we have to follow the direction of the Government. In other words we now live in a dictatorship. I just hope that one day we will return to democratic rule, because my Father and Grandfathers gave their lives to ensure our freedom.

Jcmca said...

As a previous commentator indicated, the answer to all our european problems is just to leave themto sort out their own self generated disasters. We get no benefits whatsoever despite the huge nett payments we make, so the simple answer is for the UK to just GET OUT before we are completely ruined. (I was going to say "shafted" but that would have been too near the truth!)

Anonymous said...

more taxation without proper representation from an inept organisation.

what value does the EU add except to its employees and those it induces to join by offering ngrants-- if a company sought to buy customers the same way it would be called bribery!

Anonymous said...

EH says we should be looking to reduce our contribution but preferably withdrawing before we are dragged down with the failing economies who just seem to rely on handouts

Anonymous said...

There is no way this is going to be accepted by the true sovereigns of England, Scotland, Wales and N.I.
The time has long past when instead of pining for a 'pleading' referendum; we simply said, STOP! NO MORE! and presented Cameron and cohorts with a Declaration (Demand) to do exactly as they were elected to do! That does not mean their policies/promises; but Freedom from EU opression!

Anonymous said...

The French do what they please, so why don`t we. Enough is enough, take us out of the EU now.

Anonymous said...

Like many other contributors to this site I believe the answer is to get out of Europe and quick. However, it will not happen by voting ourselves out. There are too many vested interests in keeping us in. It will be by one of three ways: A calamitous across Europe disaster of accidental or deliberate happening or we the people in Britain become so blighted by poverty etc etc fill in the blanks. that we actually take to the streets in the millions and the government folds and takes us out immediately. The third is that this current crisis continues to worsen until it all falls apart in painful death by a thousand cuts. Of them all I favour the last because it is more likely in my view.

David B. Neale said...

I know that many people are utterly horrified at the excesses, the fraud and the continual lies which are foisted upon the people of Britain ... not just Britain, of course.

We are in thrall now to a juggernaut of gargantuan dimensions, which is utterly undemocratic, and which exists solely for its own aggrandisement. I believe that the majority of people, ( and, I confess, I am one of them ), cannot begin to determine just how we might get out of this appalling situation. Despite the fact that I have always been a Conservative voter, I will never again vote for them; I could not vote for Labour, either, as there is essentially no difference between those parties on the EU; and of course the same applies in the case of the Liberals. I suspect I will vote for the UK Independence Party; but whether this can do any good whatever is beyond me. The politicians are snakes, and their confidence trick has worked very well. Short of massive civil disobedience, which I don't want to happen, I don't see any way out of our slavery to this undemocratic and shocking outfit. Then people of Britain never asked for it, and never asked for their independence and sovereigny to be taken away from them. The people responsible for this aught to be tried for treason.

David Neale

rjw139 said...

It is high time David Cameron stood by his promise to give us our say in a Referendum to pull out of Europe. I am pretty sure we can survive without outside of this system that continues to milk our country and its people dry. Our illustrious PM has let us down on two fronts as he had every intention of sorting out the equally deranged Human Rights regulations that impose such ludicrous limitations on how we deal with people on the wrong side of the law. You cannot pick up a daily paper these days without reading about some miscarriage of justice where penalities have been handed down by our own courts only to be overturned by Brussels. Enough is enough David, do us all a favour and look after our fine country first...

Anonymous said...

I agree that we should leave the EU

martin rowe said...

I have been saying as widely as I can, since returning to the UK in 1985 after 25 years working abroad, that we should leave the EU. Therefore I have no comment to make on this latest foolishness on the part of Brussels.

Anonymous said...

This sounds like a waste of money to me. There appears to be no accountability and no transparency. As for anyone expecting Cameron to do more than grandstand - well, I guess they can hope. He can talk the talk but can't walk the walk. He should just say 'no' 'non' etc. And jsut keep asking the question from the Lorrie Morgan hit - 'what part of no don't you understand'?

Gosporttory said...

I fully agree with all the above comments.

I wonder if we will ever get the EU Gravytrain referendum that our people so crave? It may never happen with so many champagne socialists and liberal socialists already on the Gravytrain, e.g. Lord & Lady Kinnock, Lady Mandelson, etc, etc coining it in by the bucket load!

Anonymous said...

Get out of Europe NOW!

Anonymous said...

I think that now we ALL realise that
the self-serving & corrupt Federal
government has now become a self generating cash cow.
Dear god it will be so so hard to
dismantle !!

Lee said...

Will no one rid me of this troublesome ... EU.

GTR said...

Until their accounts are signed off by the auditors we should not pay them any more money.

JM said...

The costs of Europe are already too high and should be reduced, not increased. The Commission must learn that expenditure cannot be increased during a recession from countries already crippled with debt and from people whose living standards are falling.

saltysam said...

PLEASE can't someone grip this EU monster and simply get us in the O U T ? Remember David Cameron's "cast iron guarantee" that we would have a referendum? Was I abroad when it happened?

lumpus said...

Isn't it time to call a halt on this thing they call the EU ? Brussels is clearly out of touch , imposing policies which are downright ridiculous , and the Eurozone just does not work . I say lets quit Europe and nationalise the industries we do have left .

Neil said...

Someone give us a referendum on our continued membership of this waste of space called the EU. The politicians (our elected servants) are too scared or have to much vested personal interest,

Anonymous said...

Says it all really about Brown and his government that he signed a treaty that gives the dictators in Brussels the right to unlimited funds to destroy our country and finances.

Time for Cameron not just to say no more but to demand a reduction in the EU budget contributions in line with what er are experiancing here.

Ofcourse a better idea would be to leave the EU never to return.

John said...

I voted in favour of "Economic Union" and have watched with growing disbelief at the commision usurping the powers of sovereign states without the peoples of those states having any say in those changes. We have seen the european judiciary make a joke of our legal system and the growth of a massive beaurocracy which we have to fund and which grows year by year. When are we going to grow up and leave these thieves to their own devices?

Anonymous said...

It's our money no matter how you cut it. Just get us out of the EU

Thomas Lennon said...

Like or not we all would have to vote for UKIP to get us out the EU, all this paying out for nothing is bringing this country down. It is totally unaffordable.

Anonymous said...

Cameron will never get the message unless the British public revolt. You can post on blogs, sign petitions, email your local MP until you are blue in the face....nothing changes despite Cameron's pre election BS when he told us all we were the bosses, what a joke! If a million of us camped on his door step he would soon get the message.
I'm game are you? But knowing the British public I rather think I would be on my own:-(

Anonymous said...

I agree with David R and David Utton and am pleading with David Cameron and the Conservative party to listen to the will of the people. The EU was a trading association and they now have so much power that no country can so no to them. We have to cut back on their finances as well as our own. Do something David Cameron if you want the respect of this country - Maggie went to them and managed to get a reduction on our payments to the EU. Go in their fighting and do not back down.

Anonymous said...

To me it is crucial that the EU does not get its own revenue raising powers. The only real control on the EU is its funding stream which forces it to go back to and work with governments.

Once it has its own revenue raising powers and income it will ignore the will of all governments and the public. It will not longer need them. It will drastically raise its costs and the burden on all of society in Europe.

Anonymous said...

LOCAL, CENTRAL, EUROPEAN GOVERNMENT. ALL DESIGNED TO TAKE YOUR MONEY AND SLAP YOU IF YOU DARE REFUSE. WE HAVE A SOLUTION, THE YOUNGER GENERATIONS ARE HAVING NONE OF IT, THEY ARE NOT LISTENING AND WONT EVEN BUY A TV LISCENSE. BE WARNED CHANGE IS COMING

Anonymous said...

D M W says: Whose idea was it that 0.3% of our current VAT loading be paid over to the EU ?
If it were our idea, shame on the perpetrators.
If it were imposed by the EU it could prove to be the wedge in the door for the corrupt EU to impose a tax regime upon the UK.
The UK should have nothing to do with an undemocratic chaos-creating entity such as the EU and we should be influencing its collapse ASAP.

Anonymous said...

Am I wrong, but I thought that the EU's accounts have still not been successfully audited for the past few years. How can any member of any standing accept a financial ruling from such a body?