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UK budget proposal for EU tellsten that 'less is more'

brussels bureau

UK budget proposal for EU tellsten that 'less is more'


At the end of Luxembourg’s EU presidency in June, Prime Minister Jean-Claude Juncker said he was ashamed that to further the general interest it was the poorer members who were willing to forego some of the financing they had hoped for. Yet that willingness gave the next president an opening on which to hang its proposal.

Prime Minister Tony Blair and Finance Minister Gordon Brown’s smaller budget formula, capping EU spending at 1.03% of the members’ incomes,
fits with the big net contributors’ wishes. The Netherlands, Sweden and Finland also voted against the Luxembourg compromise to demand bigger reductions in their net payments to Brussels. It is uncertain how Spain will react to Britain’s aid phase-out plan.

The new members are giving it some thought, as
296 billion euros would be earmarked for regional aid, about half of this for the ten newcomers. The largest of them, Poland, the Czech Republic and Hungary would receive 54, 23 and 22 billion over seven years, respectively. There is 14 billion euros less for all the ten than in Luxembourg’s proposal.

To sweeten the pill, the governments would have to co-finance less themselves, 15% rather than 20%. And they would be allowed more time to use the money, three rather than two years, for development projects. The newcomers acknowledge that the lack of a long-term budget would cut them off from billions of euros they badly need to
modernise their economies. This could make London’s plan worth considering.

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