The European Union has defied Britain’s attempts to control its spending by demanding an extra £9.5 billion to tide it over until the end of the year.
By Bruno Waterfield, Brussels
1:13PM GMT 27 Mar 2013
EU officials said they needed the money – more than the international community is paying to bail out Cyprus – to settle this year’s unpaid bills.
Britain described the demand as “totally unacceptable” and promised to “fight” against it. It would cost British taxpayers about £1.2 billion, or £77 for every household, at a time of national austerity.
But David Cameron does not have a veto over the issue and the budget increase could simply be approved by a majority vote among member states.
The EU’s demand for extra cash, made by the European Commission, is part of the political manoeuvring over its longer term budget. The Prime Minister appeared to have won a victory last month when he secured a 3.3 per cent cut to the EU’s funding deal from 2014 to 2020.
However, MEPs said they would ratify that only if national governments came up with extra money this year to settle unpaid bills on spending projects across the continent’s poorer regions.
Janusz Lewandowski, the EU’s budget commissioner, said another £9.5 billion was needed and warned member states they could not adopt an “ostrich policy” while the bills mounted up.
“This is creating a snowballing effect of unpaid claims transferred on to the following year,” he said. “The ostrich policy can only work for so long: postponing payment of a bill will not make it go away.”
The size of the demand, which exceeds the £8.5 billion being spent on Cyprus, provoked anger. Greg Clark, the Financial Secretary to the Treasury, described it as “extraordinary”, adding: “This is a totally unacceptable request from the commission at a time when most EU member states are taking difficult decisions to reduce public spending.
“It is extraordinary that the commission should demand an increase in the EU budget that is bigger than the rescue package that was agreed for Cyprus earlier this week.”
Nigel Farage, the leader of the UK Independence Party, attacked the increase as an insult to Cypriots, who face a levy on all savings over £85,000 as part of the country’s bail-out package.
“The proud people of Cyprus, who have just witnessed their country be economically assaulted must be sick to hear that the EU wants an extra sum greater than their bail-out cost,” he said.
The European Commission dismissed the criticism and insisted that the increase would be within budget payment ceilings. “You order a meal in a restaurant knowing its price, you eat it, then you complain when the bill arrives?” asked a spokesman.
The Open Europe think-tank predicted that Mr Cameron would face defeat on the issue.
“The UK and its allies will now fight the European Parliament tooth and nail to reach a compromise but the upshot is that the UK will probably end up paying more,” said Pawel Swidlicki, a spokesman.
“Rather than accepting that the money has run out and finding savings from elsewhere or from future years, the commission and the MEPs are insisting on yet another raid on taxpayers.”
The European People’s Party, the federalist and biggest political grouping of MEPs, also attacked the commission’s budget demand – but because it is £4 billion less than the amount the assembly wants governments to pay.
“This can only be a first step and more payments will be needed,” said Giovanni La Via MEP, a Christian Democrat and the group’s budget spokesman.
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