Downing Street Says » EU Budget

Asked for details of the amendments the UK’s EU budget proposals, the Prime Minister’s Official Spokesman (PMOS) said that they amounted to a modest increase in the size of the budget from 847 billion euros to 849 billion euros. The overall ceiling remained below 1.03%. They would include measures which enhanced funding for new member states (allowing them to claim back VAT for structural fund projects), making it easier for them to access and use the funds available, and increase the impact of funding on the ground. They also addressed some of the specific concerns and helped the net position of individual member states. The revisions would be worth real money to the new member states and would, in practical terms, take them near where they were in terms of the Luxembourg proposals. There are no revisions to the rebate in this proposals or to the review clause. We would still be making an extra contribution of 8 billion euro to the new member states, which was equivalent to halving our rebate on the structural funds provided to new member states.

The PMOS stressed that our rebate would still go up not down. We would still not give up any of the rebate as it applies to either the Common Agricultural Policy (CAP) as a whole or on any money going to the original 15 members. Therefore we had kept very much to the principles, as set out by the Prime Minister last week. Asked if we ruled out any further movement on the rebate at the Brussels, the PMOS said that we had set out the principles under which we were discussing future financing. Those remained. Firstly a meaningful review clause was essential. Secondly that the rebate as it related to CAP and to the existing 15 did not change.

Asked if our contribution would rise, the PMOS said that the increase would be very small.

Put to him that the initial proposals hadn’t gone down very well and asked how we expected such small changes to make a difference, the PMOS said that as we had said all along, this was not going to be anyone’s ideal deal. However people had to consider what the alternatives were. The alternative was that we did not get a deal for several years and it might well end up with the European Parliament simply rolling over the negotiations, which in turn could lead to the Accession states getting much less money. Under our proposal the Accession sates would still get a huge extra investment, to the order of £260billion. That meant that what we had done under this proposal was increase their capacity to get the money as quickly as possible. It was therefore a classic case of whether the Accession countries accepted the bird in hand or held out for some theoretical deal which might not come for some times.

Asked if the review would cover the whole budget or just the CAP, the PMOS said that it would cover the whole budget. Questioned further, the PMOS said that what we could not do was dictate the outcome of the review and say that it must guarantee change. Equally however it had to allow for change to happen. The purpose of the review would be to decide a more rational basis for the EU and any rational basis must therefore consider that CAP.

Asked if how confident he was that these proposals could satisfy the other states, the PMOS said that satisfy was a big word. In terms of whether people thought we were putting forward serious proposals which were most likely to attract agreement, the Prime Minister believed that there was a real momentum to try and reach a deal. If you looked at developments such as the agreement on REACH that we announced yesterday, and the role that the German government played in getting that agreement, there was a momentum towards a deal in Europe. People recognized that it was in Europe’s interest to get the Accession countries their money. If you looked at the trade flows, our trade with new member states had increased between 1993 and 2003 by 300%. That was pre-accession. To keep that process going you had to keep the accession countries developing. If you looked at the result of early enlargements our trade with Ireland and Spain increased by £27billion per year between 1989 and 2003. That showed the benefit. The money that we got back in terms of trade outweighed the investment.

Asked if this proposal was any different from the last one, the PMOS said that in terms of meeting individual countries needs and so on, what this had done was make our proposals more attractive to Accession countries. It would mean more real money but it was on a case by case basis so he would not generalize on what people were getting.

Asked why we had expressed so little confidence in the ability of the Austrian and Finnish presidencies to be able to resolve the budget after us, the PMOS said that in the case of Austria, their position on the CAP was fundamentally different from our own. Therefore it seemed unlikely that they were going to be arguing for the kind of mid-term review which we believed was necessary. The history of countries with their background suggested otherwise. He didn’t think that anybody who was experienced in Europe seriously believed that a deal was possible during those two presidencies. Doing something like this was a very very massive task and of course the Fins might be able to do it, but we were saying to Accession countries that they had to make a realistic judgment as to whether any deal was likely to get better for them and bear in mind that in the meantime they wouldn’t have access to the money. In terms of their response he wasn’t sure that the Accession countries were actually arguing with that.

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» Wednesday, December 14, 2005

EU Budget

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