U.K. Chancellor of the Exchequer George Osborne hasn’t fooled the British public into thinking he won a reduction in a payment demanded by the European Union, the opposition Labour Party said.
“The British people don’t like being taken for fools and everybody has now seen through George Osborne’s smoke and mirrors,” Ed Balls, Labour’s shadow chancellor, said in an interview on BBC Radio 4’s “Today” program.
EU finance ministers agreed in principle yesterday to stretch out Britain’s payment of a 2.1 billion-euro ($2.6 billion) bill until September 2015. While the accounting arrangement includes an accelerated refund, it would leave the U.K.’s overall contributions to the EU untouched.
The EU had originally set a deadline of Dec. 1 for the payment. “The fact is not a single penny has been saved for the taxpayer compared to two weeks ago,” Balls said. Speaking on the same BBC program, Osborne said he had achieved a result for British taxpayers.
The EU bill, part of a funding reallocation that forced Britain and eight other countries to pay more, has lengthened the list of grievances that prompted U.K. Prime Minister David Cameron to propose a referendum in 2017 that could take Britain out of the bloc.
“The U.K. will pay the whole amount without any penalties attached or interest rates,” Irish Finance Minister Michael Noonan told reporters yesterday after the Brussels meeting. “The installments will be paid over a period of time.”
Britain’s room for compromise on the one-time payment -- labeled a “technical” adjustment by the European Commission -- was limited by blossoming anti-EU sentiment that threatens to make Cameron a one-term prime minister.
Budget Revisions
The EU spends about 140 billion euros annually, mostly to support infrastructure projects and agriculture. Paying in has been politically sensitive since Britain joined the EU in 1973, and the country still enjoys an annual rebate negotiated by Margaret Thatcher in the 1980s.
On the principle that the wealthy should pay more taxes, Britain was presented with the additional bill last month after revised gross domestic product data back to 2002 showed it was more prosperous than previously thought. Italy and Greece also got bigger bills, while Germany and France will get money back.
The sums shifting between EU governments amount to 9.5 billion euros, the biggest reallocation ever. In an average year, budget revisions total 1 billion euros. The commission yesterday proposed a deferred-payments plan that would kick in when more than 5 billion euros is at stake.
No Reduction
Cameron railed at the European bureaucracy for an “appalling way to behave” when he learned of the payment demand. Speaking yesterday while the Brussels negotiations were taking place, he predicted a “major problem” if other EU governments didn’t budge on the amount and the timetable.
“We won’t pay 2 billion euros on the first of December and we don’t believe in paying anything like that amount,” Cameron said yesterday in Helsinki after a meeting with Nordic leaders.
Yesterday’s accord met Cameron’s conditions by rescheduling the payments to next July and September and netting out a rebate of 1 billion euros on the extra payment that Britain would have received in 2016.
The accounting maneuver cuts the one-time payment in half without altering Britain’s EU bill for the two-year period.
The U.K. Treasury said “it is simply not correct that this is bringing forward the usual 2016 rebate; this is an additional retrospective rebate on the 1.7 billion pounds ($2.7 billion) over and above the usual rebate.”
Rebate System
Kristalina Georgieva, European Commission vice president for budget, said that as a result of the higher calculation, the U.K. payment would go up and so would the rebate on that payment.
She estimated the rebate at 1 billion euros, to flow back to the U.K. in the year after the payment is made. However, due to the unprecedented nature of this case, the rebate could be brought forward and offset against the U.K.’s 2.1 billion-euro payment, she said.
Dutch Finance Minister Jeroen Dijsselbloem told reporters that the U.K. “didn’t get a reduction, they just have this rebate system.
‘‘Instead of footing the bill, we have halved the bill, we have delayed the bill,’’ Osborne said yesterday. Labour has accused Cameron of alienating the allies Britain needs in Europe to secure a better deal.
Britain ‘‘will have to work to repair relations with Germany, whose backing will be crucial,’’ Balls and foreign affairs spokesman Douglas Alexander wrote in the Guardian newspaper Nov. 6.
The U.K. Independence Party, which wants to hustle Britain out of the EU, is standing in a special election in a parliamentary district southeast of London on Nov. 20. It will be represented by Mark Reckless, a defector from the Conservative Party. The national election is next May.
bloomberg.com
“The British people don’t like being taken for fools and everybody has now seen through George Osborne’s smoke and mirrors,” Ed Balls, Labour’s shadow chancellor, said in an interview on BBC Radio 4’s “Today” program.
EU finance ministers agreed in principle yesterday to stretch out Britain’s payment of a 2.1 billion-euro ($2.6 billion) bill until September 2015. While the accounting arrangement includes an accelerated refund, it would leave the U.K.’s overall contributions to the EU untouched.
The EU had originally set a deadline of Dec. 1 for the payment. “The fact is not a single penny has been saved for the taxpayer compared to two weeks ago,” Balls said. Speaking on the same BBC program, Osborne said he had achieved a result for British taxpayers.
The EU bill, part of a funding reallocation that forced Britain and eight other countries to pay more, has lengthened the list of grievances that prompted U.K. Prime Minister David Cameron to propose a referendum in 2017 that could take Britain out of the bloc.
“The U.K. will pay the whole amount without any penalties attached or interest rates,” Irish Finance Minister Michael Noonan told reporters yesterday after the Brussels meeting. “The installments will be paid over a period of time.”
Britain’s room for compromise on the one-time payment -- labeled a “technical” adjustment by the European Commission -- was limited by blossoming anti-EU sentiment that threatens to make Cameron a one-term prime minister.
Budget Revisions
The EU spends about 140 billion euros annually, mostly to support infrastructure projects and agriculture. Paying in has been politically sensitive since Britain joined the EU in 1973, and the country still enjoys an annual rebate negotiated by Margaret Thatcher in the 1980s.
On the principle that the wealthy should pay more taxes, Britain was presented with the additional bill last month after revised gross domestic product data back to 2002 showed it was more prosperous than previously thought. Italy and Greece also got bigger bills, while Germany and France will get money back.
The sums shifting between EU governments amount to 9.5 billion euros, the biggest reallocation ever. In an average year, budget revisions total 1 billion euros. The commission yesterday proposed a deferred-payments plan that would kick in when more than 5 billion euros is at stake.
No Reduction
Cameron railed at the European bureaucracy for an “appalling way to behave” when he learned of the payment demand. Speaking yesterday while the Brussels negotiations were taking place, he predicted a “major problem” if other EU governments didn’t budge on the amount and the timetable.
“We won’t pay 2 billion euros on the first of December and we don’t believe in paying anything like that amount,” Cameron said yesterday in Helsinki after a meeting with Nordic leaders.
Yesterday’s accord met Cameron’s conditions by rescheduling the payments to next July and September and netting out a rebate of 1 billion euros on the extra payment that Britain would have received in 2016.
The accounting maneuver cuts the one-time payment in half without altering Britain’s EU bill for the two-year period.
The U.K. Treasury said “it is simply not correct that this is bringing forward the usual 2016 rebate; this is an additional retrospective rebate on the 1.7 billion pounds ($2.7 billion) over and above the usual rebate.”
Rebate System
Kristalina Georgieva, European Commission vice president for budget, said that as a result of the higher calculation, the U.K. payment would go up and so would the rebate on that payment.
She estimated the rebate at 1 billion euros, to flow back to the U.K. in the year after the payment is made. However, due to the unprecedented nature of this case, the rebate could be brought forward and offset against the U.K.’s 2.1 billion-euro payment, she said.
Dutch Finance Minister Jeroen Dijsselbloem told reporters that the U.K. “didn’t get a reduction, they just have this rebate system.
‘‘Instead of footing the bill, we have halved the bill, we have delayed the bill,’’ Osborne said yesterday. Labour has accused Cameron of alienating the allies Britain needs in Europe to secure a better deal.
Britain ‘‘will have to work to repair relations with Germany, whose backing will be crucial,’’ Balls and foreign affairs spokesman Douglas Alexander wrote in the Guardian newspaper Nov. 6.
The U.K. Independence Party, which wants to hustle Britain out of the EU, is standing in a special election in a parliamentary district southeast of London on Nov. 20. It will be represented by Mark Reckless, a defector from the Conservative Party. The national election is next May.
bloomberg.com
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