Friday, June 17, 2005


Should we lose 'our money'?

Having been away for a week's holiday in one of the EU's relatively undiscovered gems- Corsica- I've been particularly interested in the crisis gripping the organisation over Britain's rebate. This was 'won' by Mrs Thatcher at the Fointainbleu summit in 1984. I recall her grinding on and on about 'our money' until in the end the other heads of government gave in, I suspect just to shut her up and move on to other things. Some claim this a supreme example of Maggie's typical and admirable British obstinacy which won billions for the UK. But such analyses do not measure the cost we later paid in the coin of refusal of the other premiers to listen to Brtitish arguments when adduced by this boring termagent. But at least she won the dosh and that is something which cannot be taken away from her.

But should it now be taken away from us? Most of Europe seem to think yes but Blair has struck back by insisting any examination of our rebate must be matched by reform of the Common Agriculture Policy which pays some 40 per cent of the EU's near 100 billion euro budget on subsidising inefficient farmers in France and Germany by maintaining artifically high prices for farm produce. France claims the rebate might have been justified when Britain was suffering economic problems but not when the UK economy - as Blair was so keen to trumpet during the election campaign- is arguably the most dymanic in the EU.

So why do we think we should keep our rebate? Mainly because we think the same argument still applies. A brief look at the budget contributions of leading EU countries in relation to what is received throws a little light on the subject. The ratios of what is paid out to what comes back in work out as follows(in billions of euros): Ireland- 1.1: 2.6; Germany-19.2:10.3; Sweden-2.5: 1.4; Netherlands-4.9:1.9; and France- 15.2: 13.3. Britain meanwhile has a ratio of 15.1:6.1+5.1 rebate. Even this cursory examination reveals that UKs ratio is less favourable than the others. We receive 4 billion in CAP payments while France receives 10.5. According to my arithmetic there is a case for us to argue though Holland must also feel aggrieved and Germany too as the major source of EU funding.

I suspect that, despite the justice or otherwise of any financial calculations the plain fact of British economic recovery, while refusing to join the eurozone, added to the problems faced by France and Germany make an irrestible argument for some flexibility on our side. In the end, after much armtwisting and grandstanding for domestic electorates, a compromise will be reached which all countries will try to sell to their domestic audiences. Blair will seek to clothe himself in a Maggie Thatcher monogrammed union jack by denying Chirac any diplomatic triumph. We'll probably keep our rebate but it will be reduced and we'll say something to suggest we'll phase it out eventually. Will the CAP be reformed? Too many French farmers depend on it for this for their livelihood but some noises about ongoing attempts to reduce the percentage of the EU budget flowing into such subsidies will be made.

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