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Friday, October 31, 2014

When it comes to the EU budget, the bad news just keeps on coming

David Cameron and George Osborne might be forgiven for thinking that when it comes the EU budget, it never rains, it pours. Fresh on the heels of the Commission's explosive demand for an extra £1.7bn for this year's EU budget, the ONS' annual Pink Book published this morning has revealed that the UK's contribution last year stood at a whopping £11.27bn - much higher than the £8.6bn the Treasury had forecast (see page 14 of this HMT document) and a 32% increase on 2012.


There are a number of reasons why there is such a large discrepancy:
  • Partly this can be accounted for by the €11.2bn that was retroactively added onto the EU budget late last year (one of the European Parliament's conditions for swallowing the cut to the EU's long-term budget for 2014-2020). In addition, the growth of the UK's economy resulted in an adjustment and increase of £781m to the UK's contribution (-£190m via a separate VAT adjustment) - the same mechanism partially responsible for the £1.7bn demand. 
  • Due to its strong economic growth relative to other EU member states, a situation which looks set to continue in the near future, we also warned that the UK faced an 'EU stealth tax' via higher GNI, VAT and customs contributions.
  • We warned last year following the landmark budget cut that the UK might yet end up paying more in net terms due to Tony Blair's rebate cut and a larger share of EU funding going to new member states but the latest developments (the surcharge + stronger relative economic performance) risk pushing this up even higher.
Needless to say, this will only crank up the pressure on the government which is already in a difficult position vis-a-vis the EU budget, EU free movement and the European Arrest Warrant and will make it even harder for David Cameron to give any ground on the £1.7bn surcharge. 

7 comments:

DeeDee99 said...

We're being royally fleeced by the EU, with the connivance of our political elite.

And what benefit do we actually get for it: precious little if anything. We are paying for the Single Currency Folly

We don't need to be in the EU to trade with it.

David Hart said...

Errm, I’m sorry, run that by me again?

£11.27bn?

This is approximately 1400 new Two Form Entry primary schools. Enough to educate five hundred and eighty eight thousand primary age children.
It is about 150 brand new fully staffed general hospitals, providing care for an additional eight million people
It is enough buy 320 new Eight Form Entry secondary schools, enough to educate three hundred and eighty four thousand secondary age students
It is enough to build over 100 vocational colleges
It is not quite enough to train every single unemployed person in Britain to do the jobs currently being taken by WU migrants, but two years membership is easily enough.

And we meekly hand over £11bn every year.

For what?

Oh, yeah, to fund the very countries whose people are legally permitted to walk straight in.

I thought the idea was for the EU to improve the lot of residents so there was no need for economic migrancy.

We have only societal decline and poverty inside the EU, and massive opportunities out of it.

Come on Cameron. You know what to do.

Average Englishman said...

It has been said by some recently that when one joins a club one must be prepared to pay the membership fees without quibble. Well, what does any rational person do when the club they have joined raises its fees to an unreasonable level and the auditor refuses to approve the treasurer's books?

This doesn't strike me as a difficult question to answer. However, if the person concerned is David Cameron I suspect that one makes a lot of noise, thumps a lectern or two, huffs and puffs and then quietly pays up when it appears that no one is watching. Well Dave; this time an awful lot of people will be watching and expecting their Prime Minister to not only talk tough but act tough too. The nation is awaiting your promised renegotiation miracle.

Anonymous said...

If we leave the EU they will be a bit short of cash. Do they realise that, and what will they do about it?

christhai said...

It's not just OVER - it is well past due being over.

The UK simply cannot afford the EU. In value terms it is daylight robbery writ large.

OK - we made a HUGE mistake.

It's not (definitely not) what we signed up for.

Furthermore, there is almost NOTHING attractive about ANY aspects of the EU.

No - it's not like a Golf Club because when we buy membership we don't force 65 million people to pay the bills.

So it is time to LEAVE this God forsaken incompetent and criminal organisation which is run for the benefit of the people who run it?

If the British public have to end the misrule of Labour and the Conservatives to regain their freedom - so be it.

UKIP and leaving the idea is the only viable one on the table.

It is OVER.

Wilfred Aspinall said...

£11.27bn and presumably to increase by another £1.7bn once the Commission  demands are met. Over the next two years before we have a referendum whether the UK stays in or out of the EU why don't we demand cost efficient plans to be put in place to reduce the Commission staff, activity in the Council of Ministers and European Parliament and all the Agencies working in the EU.

How do we do this

When the Commission publishes its annual "Work Programme" we reject every initiative proposed other than the essential policy issues that are going to promote and make better the working of the Internal Market. Insist that there be no add ons during the year.

By doing that my judgement would be that over 50% efficiency savings could be made. Less meetings, less printing, less translation and less travel for the UK and other member state civil servants. Don't forget that there is a hidden cost brought about by actions undertaken in, or on behalf of, the UK by government activity, business and other organisations participation / consultation and lobbying. Everybody forgets that the £11.27bn net contribution is just for starters.

Wilfred Aspinall

martinrowe said...

Did I read somewhere that 59% of the UK electorate wishes to stay in the EU? What on earth for? There must be something that the other 41% of us have missed; won't they let us into their secret? I do not believe I have dementia yet - I am 78 - and I find it difficult to believe that the 59% have all got it. So what is the argument for remaining in the EU? That it may be seen as a way of living dangerously is the best I can come up with.