Cameron: UK won't pay £1.7bn EU bill

[EnterpriseSovereign]

David Cameron has angrily insisted the UK will not pay £1.7bn being demanded by the European Union.

"If people think I am paying that bill on 1 December, they have another think coming," the prime minister said in Brussels. "It is not going to happen."

But Commission President Jose Manuel Barroso said the demand should "not have come as a surprise" to the UK.

He said it was made under a system agreed by all the member states and based on data provided by them.

EU finance ministers have agreed to the UK's request for emergency talks about the top-up payment, which would add about a fifth to the UK's net EU contribution of £8.6bn for this year.
'Not acceptable'

Mr Cameron said he was "downright angry" and said the British public would find the "vast" sum "totally unacceptable".

"It is an unacceptable way for this organisation to work - to suddenly present a bill like this for such a vast sum of money with so little time to pay it," he said.

"It is an unacceptable way to treat a country which is one of the biggest contributors to the EU."

He added: "We are not going suddenly to get out our cheque book and write a cheque for 2bn euros. It is not going to happen."

Speaking later on a visit to Rochester and Strood, in Kent, where there will be a by-election next month, Mr Cameron made it clear the UK will not pay the full amount being demanded by the EU.

"If it is 2bn euros, no we're not, that is just not acceptable," he said.

He has not ruled out making an additional contribution at some stage.

But Mr Barroso, who steps down as Commission president next month, said the bill should not "have come as a surprise". He said the UK's contribution had fallen in 2008 under the same mechanism.

"Of course I understand the concerns it has raised in London, but any person that wants to look at them with objectivity and honesty to the rules that were approved by the member states has to accept that sometimes these decisions happen," he told reporters in Brussels.

Pushed as to what would happen if the UK did not pay, he said: "I cannot speculate on non-payment.

"We cannot have a negotiation about the GDP of different countries... this should be left to independent statistics authorities."

He added that Eurostat, the EU statistics authority, which had come up with the calculation, was itself an independent body.

He sounded like a prime minister unleashed; by turns scornful and furious, lectern thumping, downright angry.

It seemed he was doing exactly what UKIP leader Nigel Farage demanded - refusing the European Commission any money at all.

But David Cameron was well in control.

He said he would not pay on 1 December, but did not rule out paying later.

He accepted the principle of a fluctuating EU budget that meant bills went up as well as down.

After that performance he cannot, and surely will not, pay what the Commission demands.

But by how far can he negotiate down the bill? Half of £1.7bn, a quarter, a third? All represent big money.

Were he to refuse to pay whatever the Commission finally demands, could he still persuade EU leaders in vital, future negotiations?

For a party leader battling Mr Farage, the pictures on the TV news tonight will be perfect.

If his diplomats can't do a decent deal, they will come back to haunt him.
line

Mr Cameron said he wanted to examine how the EU had come up with the bill and his position was backed by several other European leaders whose countries are also being tapped for more money, claiming his Italian counterpart Matteo Renzi had described the demands as a "lethal weapon".
Drugs and prostitution

He said he first heard about the EU's demands on Thursday but acknowledged that the Treasury knew about them last week.

"You didn't need to have a Cluedo set to know someone has been clubbed with the lead piping in the library," he said.

There has been anger across the political spectrum in the UK at the EU's demand for additional money, which comes just weeks before the vital Rochester and Strood by-election, where UKIP is trying to take the seat from the Conservatives.

The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain has done better than previously thought. Elements of the black economy - such as drugs and prostitution - have been included in the calculations for the first time.
Jump media player
Media player help
Out of media player. Press enter to return or tab to continue.

George Osborne: ''It's unacceptable to be presented with a multi-billion pound demand with six weeks to pay''

The UK and the Netherlands are among those being asked to pay more, while France and Germany are both set to receive rebates. The UK is being asked to pay the most.

Several Conservative MPs have said the UK should refuse to pay the sum, describing it as "illegal".

EU diplomats told Reuters that finance ministers would meet to discuss the issue, while Downing Street is pressing for "a full political-level discussion" well before 1 December.

German Chancellor Angela Merkel said the "disparities" between what was being asked of the 28 members needed to be investigated further.

"David Cameron didn't say he wasn't going to pay it at all," she said.

"He was just concerned about the very short period he has to pay it in. So I'm confident a solution can be found to this in the foreseeable future."
'Thirsty vampire'

Labour said Mr Cameron had failed to explain how long it had known about the EU proposals, suggesting he had delayed making it public over fears about how it would go down with voters.

Shadow chancellor Ed Balls said it was wrong that an "unfair" bill had been "sprung upon" the UK but suggested that the Treasury should have acted sooner.

Source: Leaked EU Commission document

UKIP likened the EU to a "thirsty vampire" and said the demand strengthened its case for British withdrawal.

UKIP leader Nigel Farage said the UK already paid £55m a day to be a member of the EU and suggested it would have no option but to pay the supplement.

"To be asked for a whole load more and be given a few days in which to pay it, is pretty outrageous and I think people will be very, very angry," he said.

The additional payment was requested after Eurostat reviewed the economic performances of member states since 1995, and readjusted the contributions made by each state over the past four years based on their pace of growth.

The BBC's head of statistics Anthony Reuben said prostitution, drugs and tobacco-smuggling were not included in national income before 2002 when they should have been, under accounting rules.

In contrast, prostitution was included in Germany's own national accounts and given that EU budget contributions are based on national income, this partly explains why the UK has been underpaying and Germany overpaying, he added.

Source

[Simon_Jester]

I do think that "pay up, your economy is bigger than we thought, you owe us a billion-plus, you have six weeks" is too abrupt and peremptory when you're addressing a sovereign state. This is not small change we're talking about. The UK's entire 2013 revenues were about 800 billion Euros, and discretionary spending is only a fraction of that- we're talking something close to 1% of their total discretionary budget, almost certainly more than half a percent. And the UK is already running a deficit.

So while I'm not even slightly interested in people who freak out and call the EU a vampire... I think Cameron's actually within his rights to say "no, we will not pay on these terms," unless said terms are grossly misrepresented in the article that you linked to. It's a sovereignty issue, and the EU isn't supposed to override sovereignty to the point of being able to just arbitrarily demand large sums of money on short notice.

[Enigma]

Why would they add the black economy into the equation as to how well the UK is doing?

[Thanas]

I do think that "pay up, your economy is bigger than we thought, you owe us a billion-plus, you have six weeks" is too abrupt and peremptory when you're addressing a sovereign state. This is not small change we're talking about. The UK's entire 2013 revenues were about 800 billion Euros, and discretionary spending is only a fraction of that- we're talking something close to 1% of their total discretionary budget, almost certainly more than half a percent. And the UK is already running a deficit.

So while I'm not even slightly interested in people who freak out and call the EU a vampire... I think Cameron's actually within his rights to say "no, we will not pay on these terms," unless said terms are grossly misrepresented in the article that you linked to. It's a sovereignty issue, and the EU isn't supposed to override sovereignty to the point of being able to just arbitrarily demand large sums of money on short notice.

If they disagree about this whole thing even being possible, then maybe they should not have joined in the first place. It is not a sovereignty issue, the UK agreed to this happening previously. It is the same procedure as happens to every country in the EU. But of course, Cameron does not think the UK deserves to be treated equally to any other member. After all, they are special.

It is even more false to claim that this sum came out of the blue. You see, every countries' contribution is calculated years in advance according to their economy data (as they claim it to be). So the only ones who have to blame themselves here are the brits themselves - they lowballed the commission for years and now refuse to pay what they actually owe.

So, to summarize, this is not some new sum, it is what Britain should have paid in the first place. Think of it this way: you and a guy purchase something. It is agreed that both of you pay a percentage of your earnings to . Suddenly, you find out that the other guy earned much more than he claimed. So you demand to get what he should have paid. How is that unfair?

Even more, in past years they actually got money back or had to pay less because the same agency that now calculated that they owed more calculated they owed less back then. Somehow, the UK did not complain about that back then. (You also do not see Merkel raising a stink for overpaying for several years btw)

And you know where it gets really shady? The UK is already being treated as a special case for calculating those sums. They already got a rebate and pay far less than Germany and France proportionally do. But apparently that is still not enough for Cameron.

[Simon_Jester]

Why would they add the black economy into the equation as to how well the UK is doing?

I don't know, that's part of what strikes me as arbitrary about the whole affair. Not that it's completely unreasonable, but that it's a rather significant change in how one assesses the state of the UK's finances.

I mean, as a private citizen I feel I have a right to complain when my landlord arbitrarily changes the way rent is assessed and I end up having to spend a few hundred dollars covering the "oh wait you retroactively owe me more money." Especially if I am not notified in a timely fashion and given a reasonable amount of time in which to negotiate the payment and plan changes.

I do think that "pay up, your economy is bigger than we thought, you owe us a billion-plus, you have six weeks" is too abrupt and peremptory when you're addressing a sovereign state. This is not small change we're talking about. The UK's entire 2013 revenues were about 800 billion Euros, and discretionary spending is only a fraction of that- we're talking something close to 1% of their total discretionary budget, almost certainly more than half a percent. And the UK is already running a deficit.

So while I'm not even slightly interested in people who freak out and call the EU a vampire... I think Cameron's actually within his rights to say "no, we will not pay on these terms," unless said terms are grossly misrepresented in the article that you linked to. It's a sovereignty issue, and the EU isn't supposed to override sovereignty to the point of being able to just arbitrarily demand large sums of money on short notice.

If they disagree about this whole thing even being possible, then maybe they should not have joined in the first place. It is not a sovereignty issue, the UK agreed to this happening previously. It is the same procedure as happens to every country in the EU. But of course, Cameron does not think the UK deserves to be treated equally to any other member. After all, they are special.

First of all, do you have evidence that the UK misrepresented its national economy? The original article makes it sound like what changed is that Brussels altered the rules by which its accountants measure national economies. The UK's published economic statistics in 2010 could not reasonably have been expected to comply with accounting rules that Brussels didn't lay down until, say, 2012 or 2013.

If your argument hinges on the idea that Britain has been lying about the state of its economy to avoid paying its fair share of EU dues, I think you should be expected to substantiate that claim.

Secondly, when you say the UK agreed to this system, did they in fact agree to expect changes of this magnitude this fast? I might reasonably expect government agencies to give more than a single-digit number of weeks' advance notice when billion dollar sums are involved. At least, outside of emergency situations.

It is even more false to claim that this sum came out of the blue. You see, every countries' contribution is calculated years in advance according to their economy data (as they claim it to be). So the only ones who have to blame themselves here are the brits themselves - they lowballed the commission for years and now refuse to pay what they actually owe.

Again, do you have evidence that Britain did anything other than give the EU exactly the economic data it asked for?

So, to summarize, this is not some new sum, it is what Britain should have paid in the first place. Think of it this way: you and a guy purchase something. It is agreed that both of you pay a percentage of your earnings to . Suddenly, you find out that the other guy earned much more than he claimed. So you demand to get what he should have paid. How is that unfair?

Well, I would approach the other guy well ahead of time, and be prepared to negotiate. Among other things, because what if I made some kind of mistake? Am I supposed to first demand a large sum of money from this guy RIGHT THE HECK NOW, then come back looking awkward and go "uh, yeah, you didn't actually owe me money?"

This is just... basic courtesy between people or organizations that respect each other.

Even more, in past years they actually got money back or had to pay less because the same agency that now calculated that they owed more calculated they owed less back then. Somehow, the UK did not complain about that back then. (You also do not see Merkel raising a stink for overpaying for several years btw)

I think Merkel would be within her rights to complain IF Brussels knocked on her door and said "you owe us two billion euros in six weeks' time or we'll treat you like a deadbeat." If she chose not to do so, that doesn't mean other people lose the right to complain about similar behavior at a later time.

It's one thing to recalculate and say "look, you really should have been paying more money, let's talk this over." It's another thing to recalculate and demand a large lump sum payment right away.

And you know where it gets really shady? The UK is already being treated as a special case for calculating those sums. They already got a rebate and pay far less than Germany and France proportionally do. But apparently that is still not enough for Cameron.

Look, it's totally fine by me if the UK should have to pay more money. The point is that if the UK needs to be paying more money, those dues should be negotiated and increased gradually, in a reasonable timeframe. Which is just basic common sense when it comes to international finances. I mean what, is the UK supposed to just take out 1.7 billion euros in loans in the next three or four weeks, over and above the already considerable deficit borrowing they'll already be doing during that period?

The part about the UK owing the EU money is not the problem. The part about the timing is, unless you can actually prove that the UK could reasonably have foreseen that "some time in 2014, the EU will tell us we owe them the 1.7 billion euros in back dues we never paid, by December 1."

[Dartzap]

I suspect its the mini-budget statement thats a month away causing the headache. They may have had that billion lined up to bribe the electorate/invest in infrastructure before next may. No doubt the treasury minions are doing a hasty rewrite.

[Minischoles]

Thanas hit it spot on - Cameron and the red top papers are painting this as some huge surprise bill that came in....but this is part of being in the EU, hell it's how Inland Revenue in the UK work. If they find out you earned more than you should they demand more tax and if you were taxed too much you get some money back.

Of course Cameron, with a by election defeat and another one looming against UKIP and even more problems with them in the next General Election has to play all tough and anti-EU.

[Thanas]

I don't know, that's part of what strikes me as arbitrary about the whole affair. Not that it's completely unreasonable, but that it's a rather significant change in how one assesses the state of the UK's finances.

This is bullshit. Every country knew what the rules were years in advance. This is nothing but a PR point to go "oh no, we were totally surprised by this which has been talked over, agreed to and decided several years ago".

I mean, as a private citizen I feel I have a right to complain when my landlord arbitrarily changes the way rent is assessed and I end up having to spend a few hundred dollars covering the "oh wait you retroactively owe me more money." Especially if I am not notified in a timely fashion and given a reasonable amount of time in which to negotiate the payment and plan changes.

These are not things the EU arbitrarily comes by. These rules are agreed to in advance. The finance ministers talk about this kind of stuff regularly. BECAUSE OTHERWISE THE EU WOULD NOT BE ABLE TO BUDGET AT ALL. Now, do you think the EU does not talk about its budget? Not in parliament, not in the committees, not among the Governments who have to agree on it? The UK was at the table for all those meetings.

BTW; this assesment is done each autumn. It has been that way for years. I don't know why Britain is surprised about this at all. If you pay rent and each year your landlord assesses costs like keeping the yard clean on a given date, then why should you be surprised about it coming in?

First of all, do you have evidence that the UK misrepresented its national economy?

Where did I make that claim?

The original article makes it sound like what changed is that Brussels altered the rules by which its accountants measure national economies. The UK's published economic statistics in 2010 could not reasonably have been expected to comply with accounting rules that Brussels didn't lay down until, say, 2012 or 2013.

Correct, but other nations did (like Germany) and thus have been paying for much more over the past period than they should have. France paid over 1 bn pounds more, Germany paid over 800million pounds more. These nations now will get their money back while the UK will pay its fair share. It is not a new tax. It is not a new way to finance the EU by taxing Britain. It is simply what they should have paid the first time.

If your argument hinges on the idea that Britain has been lying about the state of its economy to avoid paying its fair share of EU dues, I think you should be expected to substantiate that claim.

No, they have not been lying, they "merely" failed to account for their economy as other members did (and paid for) for years.

Secondly, when you say the UK agreed to this system, did they in fact agree to expect changes of this magnitude this fast? I might reasonably expect government agencies to give more than a single-digit number of weeks' advance notice when billion dollar sums are involved. At least, outside of emergency situations.

You mean, the same procedure as every year for the past decade?

BTW, when it came to bailing out the banks (and british financial instituations with them), how much notice did you think the nation of Germany got before being asked to pay up? Cameron is simply being a huge dick here.

Again, do you have evidence that Britain did anything other than give the EU exactly the economic data it asked for?

Do you know what the EU asked for? Do you know how these things are decided?

This is just... basic courtesy between people or organizations that respect each other.

No, this is dickery between a guy who has become obstructionist and dealbreaker #1 in the EU and the commission which has to be civil to him.

Look, it's totally fine by me if the UK should have to pay more money. The point is that if the UK needs to be paying more money, those dues should be negotiated and increased gradually, in a reasonable timeframe. Which is just basic common sense when it comes to international finances. I mean what, is the UK supposed to just take out 1.7 billion euros in loans in the next three or four weeks, over and above the already considerable deficit borrowing they'll already be doing during that period?

Yes. So what? Nobody asked Germany if they could pretty please renegotiate the money that went to the PIGS.

The part about the UK owing the EU money is not the problem. The part about the timing is, unless you can actually prove that the UK could reasonably have foreseen that "some time in 2014, the EU will tell us we owe them the 1.7 billion euros in back dues we never paid, by December 1."

Listen, this thing happens every autumn. I know the German government keeps an emergency reserve precisely for this sort of thing. This assesment has been going on for over a decade - now going on to two decades. And now the UK is surprised that the assesment came at the same time as it always does?

[streetad]

There is absolutely no way that Cameron can afford to cave in and pay - it would be political suicide. From a party standpoint as it plays directly into the hands of UKIP, and from a personal standpoint as one of his few victories has been in restricting the rampant growth of the EU budget. So unless the EU is willing to at least negotiate on this, I can't see how the impasse can be broken.

Contrary to how he may be presented by the left, Cameron does NOT want Britain out of the EU. I think there is a mutual lack of understanding in that the section of British society that are enthusiastically behind the European 'project' is relatively small. In order to keep public support behind the EU, you need to keep another significant section of people onside; those who see membership as a necessary evil in order to get access to the Common Market. The more the costs of membership (both financially and in terms of 'sovereignty given up') increase, the more members of this group will swing to the other side.

Cameron has promised a referendum on membership in the hopes that this will demonstrate a majority of public opinion behind the EU in order to 'settle' the matter and marginalise the Eurosceptic parts of his party (along with UKIP). Things like this are 'unhelpful' to say the least, especially given the timing with a general election looming and a large part of the press demanding that he come back from the EU summit with some kind of substantial win for Britain.

[Sinewmire]

Contrary to how he may be presented by the left, Cameron does NOT want Britain out of the EU.

Does anyone think that? As a leftie myself, I just think that Cameron is taking swipes at the EU to pander to UKIP voters, rather than wanting to leave the EU.

[Crown]

Contrary to how he may be presented by the left, Cameron does NOT want Britain out of the EU.

Does anyone think that? As a leftie myself, I just think that Cameron is taking swipes at the EU to pander to UKIP voters, rather than wanting to leave the EU.

I concur. He's trying to get to the right of UKIP on this issue, which is both moronic and doomed to begin with. It is also politically necessary for him to do so, which makes the oncoming train wreck fascinating.

[LaCroix]

I can't really see the EU backing down on this issue. There is very little goodwill left when it comes to the UK not wanting to pay their share, given the fact they already enjoy the privilege of a rebate.

On the other hand, I can't see Cameron backing down, either.

What are the consequences the Eu(Commission or Parliament) can inflict on the UK if they don't comply?

[Simon_Jester]

This is bullshit. Every country knew what the rules were years in advance. This is nothing but a PR point to go "oh no, we were totally surprised by this which has been talked over, agreed to and decided several years ago".

Put this way.

Suppose in Year X you sign off on a situation where you accept that you may be charged very large sums of extra money on very short notice because "you owe us more." And then in Year X+5 you complain about being charged such a large sum.

I can acknowledge that this is grandstanding on Cameron's part.

However, I don't think it's right to drop billion-euro bills or fees on a sovereign state, expect them to come up with the money in four or five weeks, and presumably penalize them for not doing so. And so far it sounds like that's what's happening here.

Even if the UK agreed to precisely this possibility, I don't think it's a good policy for the EU to follow. And I think that having someone complain about it on grounds that it seems arbitrary to say 'the money is due in five weeks' is reasonable.

I mean, as a private citizen I feel I have a right to complain when my landlord arbitrarily changes the way rent is assessed and I end up having to spend a few hundred dollars covering the "oh wait you retroactively owe me more money." Especially if I am not notified in a timely fashion and given a reasonable amount of time in which to negotiate the payment and plan changes.

These are not things the EU arbitrarily comes by. These rules are agreed to in advance. The finance ministers talk about this kind of stuff regularly. BECAUSE OTHERWISE THE EU WOULD NOT BE ABLE TO BUDGET AT ALL. Now, do you think the EU does not talk about its budget? Not in parliament, not in the committees, not among the Governments who have to agree on it? The UK was at the table for all those meetings.

BTW; this assesment is done each autumn. It has been that way for years. I don't know why Britain is surprised about this at all. If you pay rent and each year your landlord assesses costs like keeping the yard clean on a given date, then why should you be surprised about it coming in?

If the landlord assesses "additional fees" equal to 20% of my total yearly rent, then I think I'm entitled to complain. Or, if if these additional fees are truly necessary, I'm entitled to ask that they be amortized over a period of time, that I be notified in a timely fashion that I owe this large sum of money, and so on.

Now, if your argument is that the UK actually had months and months to prepare for this, and that they should have been able to predict 6-12 months ago that they'd wind up owing 1.7 billion euros, that's different, because, again, just to emphasize this:

My objection is not to the call for more money. My objection is to the timeframe it's supposed to be delivered in.

It is very disruptive to any well-ordered financial system that runs on a budget to have to deal with sudden demands for large amounts of money. So if the assessments are being done in October and the money is due by December 1, that is a serious potential problem with the system- even if "it worked just fine" in previous years for various countries.

First of all, do you have evidence that the UK misrepresented its national economy?

Where did I make that claim?

You sure as heck implied it with this analogy:

"So, to summarize, this is not some new sum, it is what Britain should have paid in the first place. Think of it this way: you and a guy purchase something. It is agreed that both of you pay a percentage of your earnings to . Suddenly, you find out that the other guy earned much more than he claimed. So you demand to get what he should have paid. How is that unfair? "

If you don't think the UK underreported their income, don't compare this situation to a man falsely underreporting his income. It's dishonest of you.

Correct, but other nations did (like Germany) and thus have been paying for much more over the past period than they should have. France paid over 1 bn pounds more, Germany paid over 800million pounds more. These nations now will get their money back while the UK will pay its fair share. It is not a new tax. It is not a new way to finance the EU by taxing Britain. It is simply what they should have paid the first time.

I am aware of that. But when you recalculate someone's bills on them, you have to allow for a reasonable amount of time to assemble the money and make the payment. If the EU wants to stick to this December 1 deadline for having the money be reshuffled (from Britain to France, let's say), then they should be doing the assessments earlier in the year.

No, they have not been lying, they "merely" failed to account for their economy as other members did (and paid for) for years.

Were they expected to account for their black market economy? Did the EU inform them of this expectation?

If so, then it is clearly the UK's fault that they now owe back dues. If not, then it is clearly not the UK's fault that they owe back dues. They may still owe the dues- but it's reasonable to extend time to budget out how they're going to pay for it.

Secondly, when you say the UK agreed to this system, did they in fact agree to expect changes of this magnitude this fast? I might reasonably expect government agencies to give more than a single-digit number of weeks' advance notice when billion dollar sums are involved. At least, outside of emergency situations.

You mean, the same procedure as every year for the past decade?

BTW, when it came to bailing out the banks (and british financial instituations with them), how much notice did you think the nation of Germany got before being asked to pay up? Cameron is simply being a huge dick here.

Look, it's totally fine by me if the UK should have to pay more money. The point is that if the UK needs to be paying more money, those dues should be negotiated and increased gradually, in a reasonable timeframe. Which is just basic common sense when it comes to international finances. I mean what, is the UK supposed to just take out 1.7 billion euros in loans in the next three or four weeks, over and above the already considerable deficit borrowing they'll already be doing during that period?

Yes. So what? Nobody asked Germany if they could pretty please renegotiate the money that went to the PIGS.

Bailing out banks and bankrupt countries is an emergency because a bank can go bankrupt and break down in a matter of days, causing huge second-order financial consequences.

A routine transfer payment is not an emergency. The basic financial health of France or Germany does not depend on whether those funds show up now or three months from now.

The part about the UK owing the EU money is not the problem. The part about the timing is, unless you can actually prove that the UK could reasonably have foreseen that "some time in 2014, the EU will tell us we owe them the 1.7 billion euros in back dues we never paid, by December 1."

Listen, this thing happens every autumn. I know the German government keeps an emergency reserve precisely for this sort of thing. This assesment has been going on for over a decade - now going on to two decades. And now the UK is surprised that the assesment came at the same time as it always does?

Well, to be fair, if this scale of transfer is a normal thing, such that EU countries routinely end up having to pay a sum equal to 20% or so of their yearly dues on four or five weeks' advance notice...

In that case, yes, it's normal and the UK should have expected it.

On the other hand, while it's normal, it's not good. It's not healthy to have a system where in order for the EU to budget, it has to disrupt the ability of the individual member nations to budget by forcing them to park a few billion euros on the side on the off chance that their dues were underpaid drastically.

Either the dues should be assessed in such a way that there's less random drift from year to year, or they should make them payable over a period of time rather than asking for a lump sum.

[madd0ct0r]

ugh, simon, the rules for establishing each country's contribution are well known to all parties. Someone at the treasury would have known before the EU did how much would be needed.

Cameron is grandstanding, becuase, imo, he can't afford to let UKIP try and run with this story. The trainwreck might be fascinating, but I'd prefer to not be trapped on that train. If we do leave the UK i'm going to have to put some serious thought into switching to an Irish passport.

[Starglider]

The (hopelessly and pathetically fudged) statistics are a smokescreen; the intent is pretty obvious when 1 billion each has been credited back to France and Germany, the two most powerful countries in the EU, and taken from the UK, the perenial scapegoat, whipping boy and tax donkey. The primary motivation is that France has gone from being a net recipient from the EU (ten years ago) to paying in slightly more than the UK; combined with the need to at least appear as if they're trying to meet 3% budget deficit limit, this is causing significant economic stress. The adjustment puts the UK back into second place just behind Germany* in terms of net contribution to the EU; and that's with the Thatcher rebate. Without Thatcher the UK would be paying the most of any EU nation while still being frozen out of the French-German central decision making apparatus. Italy's bill is half that of the UK.

The UK is overdue for a referendum on EU membership. I am not certain how I would vote but I look forward to the pro-EU side actually having to justify themselves for once, instead of just submission to the EU for granted. If the Scottish referendum was good and a triumph of democracy etc then one for the whole UK must be even better.

* I would note the entire German net contribution is slightly less than the Polish net subsidy. So essentially Germany is investing in cheap manufacturing infrastructure just over the border. Italy is hit by just half the bill that the UK gets despite having 80% of the UK GDP... all of which is spent subsidising Portugal. The UK contribution is roughly enough to cover the combined Spanish and Greek subsidies. Roughly speaking that leaves the French contribution to be spread over eastern Europe and the rest swallowed in central administrative overhead.

[Welf]

However, I don't think it's right to drop billion-euro bills or fees on a sovereign state, expect them to come up with the money in four or five weeks, and presumably penalize them for not doing so. And so far it sounds like that's what's happening here.

UK can raise that money pretty easily. A government is not a person, and UK is not Greece. The UK raises every moth something between 8-12 bn GBP, or 12-16 bn in 6 weeks. Raising additional 1,7 bn would only amount to 10-15% more in that time frame. There is an auction of UK government bonds every week, and the sums can change in the range of 4 bn between weeks. So raising the money can be done by a simple administrative order.

[Irbis]

I read this thread and wonder where all the scaremongers saying Scotland will have safer finances and EU membership inside UK are. Between this and Cameron's mass devolution, useful idiots who voted 'no' can soon wake up with hand in the chamber pot

It is very disruptive to any well-ordered financial system that runs on a budget to have to deal with sudden demands for large amounts of money. So if the assessments are being done in October and the money is due by December 1, that is a serious potential problem with the system- even if "it worked just fine" in previous years for various countries.

You are aware that most sane states do keep crisis funds for exactly that reason? Or if not, can move unspent money (as usually budget is never fulfilled and there is always some leftover) to cover that? Or like Welf noted, borrow easily? Or actually use that sovereign central bank UK harped so much about and temporarily add 1.7 bln to your current account? To big first world nation, there is no such thing as getting money on short notice.

If the EU wants to stick to this December 1 deadline for having the money be reshuffled (from Britain to France, let's say), then they should be doing the assessments earlier in the year.

Then the shifts would be even larger and more guessed.

On the other hand, while it's normal, it's not good. It's not healthy to have a system where in order for the EU to budget, it has to disrupt the ability of the individual member nations to budget by forcing them to park a few billion euros on the side on the off chance that their dues were underpaid drastically.

You mean, have crisis funds?

Let me ask you, do you spend 100% of what you earn and never keep any reserve?

Either the dues should be assessed in such a way that there's less random drift from year to year, or they should make them payable over a period of time rather than asking for a lump sum.

You know that EU doesn't burn the money ritually at stake but actually spends it, and since EU can't borrow money or tax anything they need to have the funds on hand once the bills are in? Or they have much larger problems than UK can ever have? EU can't wait once it has spending instructions, including these mandated by, guess who, UK...

The (hopelessly and pathetically fudged) statistics are a smokescreen; the intent is pretty obvious when 1 billion each has been credited back to France and Germany, the two most powerful countries in the EU, and taken from the UK, the perenial scapegoat, whipping boy and tax donkey.

But you have any hard numbers to support that claim, yes?

Without Thatcher the UK would be paying the most of any EU nation while still being frozen out of the French-German central decision making apparatus. Italy's bill is half that of the UK.

Gee, maybe, just maybe they wouldn't be "locked out" if they didn't keep drinking Murdoch's kool aid and do everything they could to ruin any possible compromise. You might as well complain UKIP is locked out of UK government.

As for the claim on Italy, let's see [link]:

Italy 14,336.22
UK 11,273.41

Ooops. I can't also help but notice the first table, with France alone paying 1 bln instead of UK. Or ultra-rich Poland paying 185 mln instead of UK. Poor oppressed island

The UK is overdue for a referendum on EU membership. I am not certain how I would vote but I look forward to the pro-EU side actually having to justify themselves for once, instead of just submission to the EU for granted. If the Scottish referendum was good and a triumph of democracy etc then one for the whole UK must be even better.

You mean, somehow make facts and truth more convincing than emotional appeals and outright bullshit? Tall order. But let's just look at HMR&C data:

https://www.uktradeinfo.com/Statistics/ ... EuOTS.aspx

Each month, free common market access gives UK 12-15 bln in exports. Doin a lot to close UK's trade gap. Yeah, not like that is worth (invented) EU control on fruitiness of carrots and curvature of bananas

* I would note the entire German net contribution is slightly less than the Polish net subsidy. So essentially Germany is investing in cheap manufacturing infrastructure just over the border.

And what that cheap infrastructure would be? Care to name, say, one car factory belonging to German companies?

Italy is hit by just half the bill that the UK gets despite having 80% of the UK GDP...

More like (in nominal terms) 64%, unless you try really hard to fudge PPP numbers. Italy has roughly 2 trillion, UK 3 trillion.

The UK contribution is roughly enough to cover the combined Spanish and Greek subsidies. Roughly speaking that leaves the French contribution to be spread over eastern Europe and the rest swallowed in central administrative overhead.

These "subsidies" in a lot of ways go right back to more developed western EU economies. The fact less of it goes to UK is purely UK's fault, no one else's. Remember "industry is obsolete, service sector is king" braindead idea of Thatcher?

By the way, care to provide these terrifying numbers (which in real life is less than 2%) consumed by "central administrative overhead", if we ignore the fact that every administration costs?

[Grumman]

It is very disruptive to any well-ordered financial system that runs on a budget to have to deal with sudden demands for large amounts of money. So if the assessments are being done in October and the money is due by December 1, that is a serious potential problem with the system- even if "it worked just fine" in previous years for various countries.

You are aware that most sane states do keep crisis funds for exactly that reason?

How did this become a crisis? Shouldn't the EU's budget have been based on what they thought they were owed?

[LaCroix]

I read this thread and wonder where all the scaremongers saying Scotland will have safer finances and EU membership inside UK are. Between this and Cameron's mass devolution, useful idiots who voted 'no' can soon wake up with hand in the chamber pot

I can see a huge problem with Scotland if the UK actually were to leave the EU.

[DaveJB]

How did this become a crisis? Shouldn't the EU's budget have been based on what they thought they were owed?

I suspect that Cameron's known about this for some time, and thought that if he kept the issue covered up long enough and negotiated his way out of the demand, it'd get him enough personal popularity to deliver the Tories to a majority government next year.

For perspective, the last time a UK ruling party increased its share of MPs was all the way back in 1983, when Thatcher won a gigantic majority off the back of the Falklands War, Labour's "longest suicide note in history" manifesto and the SDP splitting the left-wing vote. As things stand, not only can Cameron not rely on a repeat of that situation, he actually faces the opposite problem in that UKIP are going to eat into the Tory vote (technically the Labour vote as well, but that'll likely be cancelled out by the Liberal-Democrat vote imploding).

[Simon_Jester]

I read this thread and wonder where all the scaremongers saying Scotland will have safer finances and EU membership inside UK are. Between this and Cameron's mass devolution, useful idiots who voted 'no' can soon wake up with hand in the chamber pot

Yeah, if I'd been saying that about the Scottish referendum, boy would my face have been red.

[Although if the Scots were independent they'd have this "let's reassess your dues" to deal with, that is hopefully not the same level of financial insecurity]

You are aware that most sane states do keep crisis funds for exactly that reason? Or if not, can move unspent money (as usually budget is never fulfilled and there is always some leftover) to cover that? Or like Welf noted, borrow easily? Or actually use that sovereign central bank UK harped so much about and temporarily add 1.7 bln to your current account? To big first world nation, there is no such thing as getting money on short notice.

As Grumman noted, this isn't a crisis. The most favorable interpretation for the EU's behavior is that the UK should have known this payment would be needed months in advance. Less favorably, the EU themselves didn't know they were owed this money until a few weeks ago. In which case it would hardly present a crisis for the EU if the money is not immediately forthcoming.

A state should not have to dip into an emergency fund for routine, non-emergency purposes. If this "you owe us more dues" thing is in fact not an emergency and should not surprise anyone... it should be something that can be covered as if it were not an emergency. Which means announcing that it's going to happen far enough in advance that states can budget for it.

As to borrowing or printing more money, as a practical matter that is almost certainly how the UK will have to go about paying this. But I would argue that it is still inappropriate to say "uh yeah, we just substantially recalculated your dues, so now you have to take on more debt in order to pay us this money you didn't know you owed us two weeks ago."

I'm not saying this isn't how the EU routinely operates. I'm saying it's a bad way to operate.

If the EU wants to stick to this December 1 deadline for having the money be reshuffled (from Britain to France, let's say), then they should be doing the assessments earlier in the year.

Then the shifts would be even larger and more guessed.

Wait, so the dues for this year are being reassessed? That's even worse.

Isn't there some kind of mechanism in place by which they could, say, add the "you paid too little, you paid too much so here's a refund" system to next year's dues? That would make far more sense than changing the metric you use to calculate someone's dues in mid-year and expecting them to make up the difference between what you thought they owed you and what you know think they owe you.

On the other hand, while it's normal, it's not good. It's not healthy to have a system where in order for the EU to budget, it has to disrupt the ability of the individual member nations to budget by forcing them to park a few billion euros on the side on the off chance that their dues were underpaid drastically.

You mean, have crisis funds?

Let me ask you, do you spend 100% of what you earn and never keep any reserve?

Crisis funds are for a crisis. This is not a crisis. Nothing bad will happen if France and Germany get their money back in installments in 2015, or if the UK's payments come in installments in 2015.

There is a saying, at least in the US, of the form “A lack of planning on your part doesn’t constitute an emergency on mine.” In this case, I perceive that the EU has grown accustomed to being able to avoid planning when it comes to dues calculations- because they reserve the right at the last minute to reshuffle the dues by large funds transfers between member states.

However, this lack of advanced, accurate planning about who really ought to be paying how much money, and failure to create a system that can amortize these payments over time, should not constitute an emergency on the part of any individual state. If next year it's France that owes extra dues and Britain that receives them, then the same principle applies.

Lack of planning on Brussels' part (or a system that explicitly avoids trying to plan accurately) does not constitute an emergency on London's part.

You know that EU doesn't burn the money ritually at stake but actually spends it, and since EU can't borrow money or tax anything they need to have the funds on hand once the bills are in? Or they have much larger problems than UK can ever have? EU can't wait once it has spending instructions, including these mandated by, guess who, UK...

The EU then has very just reason to call for the creation of some kind of financial cushion for its own use- rather than relying on the states to have such cushions so that it can call upon the states to scrounge under the sofa cushions for loose change to support its operations.

Now, it is bad that the EU has (apparently) no ability to float its own bonds or maintain at least a slight revenue stream for its own use. But that would be a far better solution to the problem than the status quo is.

* I would note the entire German net contribution is slightly less than the Polish net subsidy. So essentially Germany is investing in cheap manufacturing infrastructure just over the border.

And what that cheap infrastructure would be? Care to name, say, one car factory belonging to German companies?

The UK contribution is roughly enough to cover the combined Spanish and Greek subsidies. Roughly speaking that leaves the French contribution to be spread over eastern Europe and the rest swallowed in central administrative overhead.

These "subsidies" in a lot of ways go right back to more developed western EU economies...

Uh... those two statements seem to be at odds with each other. If you're arguing that the German contribution does NOT just go to building infrastructure in Poland, but that the money from the subsidies "goes back" to the donor countries...

How do you get both of those at the same time?

[madd0ct0r]

you are fixating on the timescale. i repeat. someone at the uk treasury would have known about this before the EU did.

[Simon_Jester]

OK. So, to be clear, you're saying they should have been able to calculate their own payment in advance, know it couldn't possibly be enough, and that they'd be asked for more some time in mid-October?

Exactly what factors would have made this predictable, aside from "the EU is factoring in the black market this year?" Because I doubt that accounting for the black market alone would have justified a 20% increase in Britain's dues.

[Thanas]

However, I don't think it's right to drop billion-euro bills or fees on a sovereign state, expect them to come up with the money in four or five weeks, and presumably penalize them for not doing so.

What penalties did the EU threaten them with? So far I heard none. Citation needed.

As for the time limit, it is pretty fair considering this would have been known for decades, probably as soon as it had been decided to change the accounting several years ago. If you are getting told to save up for a huge bill that will be coming in the future then you should be getting into it.

It is very disruptive to any well-ordered financial system that runs on a budget to have to deal with sudden demands for large amounts of money. So if the assessments are being done in October and the money is due by December 1, that is a serious potential problem with the system- even if "it worked just fine" in previous years for various countries.

No, it is not. For years all nations have managed to abide just fine by the system. Heck, in 2013, Germany was faced with an extra demand for half a billion. They paid without complaint. It was an increase of 15.8%. So no, the only one who "suddenly" has a problem with it is Cameron - even though he did not mind the extra money.

If you don't think the UK underreported their income, don't compare this situation to a man falsely underreporting his income. It's dishonest of you.

You do know you can unknowingly underreport your income, right? Do I have to explain everything to you?

If the EU wants to stick to this December 1 deadline for having the money be reshuffled (from Britain to France, let's say), then they should be doing the assessments earlier in the year.

Jesus Christ, do you think this is a closed-doors process? That the EU just goes into a dark hole and nobody ever talks with their counterparts? Do you have no concept of how those things work? Or how the EU asks for data? (Protip: It is largely based on what the own ministries of the UK reported to the EU).

A routine transfer payment is not an emergency. The basic financial health of France or Germany does not depend on whether those funds show up now or three months from now.

Neither is the basic financial health of Britain being threatened by paying up. I also do not get why you are so hung up on claiming certain funds could only be used in a crisis. I can only infer that you are unfamiliar with how responsible budgeting works. Every accountant worth his salt keeps a ready reserve for larger bills, which do not have to constitute emergencies.

Well, to be fair, if this scale of transfer is a normal thing, such that EU countries routinely end up having to pay a sum equal to 20% or so of their yearly dues on four or five weeks' advance notice...

In that case, yes, it's normal and the UK should have expected it.

Yes, that is precisely the system. Germany paid 15.8% more than originally planned just last year. Which is why our national budget keeps a nice cushion precisely for this sort of thing. Why the Brits are suddenly unable to do so - despite doing so for decades, or have you ever heard of this thing being a problem before? - can only be explained by gross ineptitude. They probably already planned to use that money elsewhere or did not include a cushion because they wanted to make the budget look good.

On the other hand, while it's normal, it's not good. It's not healthy to have a system where in order for the EU to budget, it has to disrupt the ability of the individual member nations to budget by forcing them to park a few billion euros on the side on the off chance that their dues were underpaid drastically.

I don't get this complaint. The money not used can be used to lower overall debt or invested elsewhere. Or the bonds can simply not get issued, thereby having no impact whatsoever.

Either the dues should be assessed in such a way that there's less random drift from year to year

That would only be possible in a command economy. The EU gets this extra money usually from taxes levied on business. Business doing well or not accounts for these large swings in revenue. Because these are not taxes levied on the general population, but rather a percentage of specific taxes levied on business.

Again, that is not the fault of the EU. THe EU would be happy to get a European-wide tax level and its own finance ministry with actual powers. Now guess who blocked any such reform. The Brits.

As far as I am concerned, this whole mess is entirely their own fault and they can very well eat what they cooked up.

There is a saying, at least in the US, of the form “A lack of planning on your part doesn’t constitute an emergency on mine.” In this case, I perceive that the EU has grown accustomed to being able to avoid planning when it comes to dues calculations- because they reserve the right at the last minute to reshuffle the dues by large funds transfers between member states.

Your perception is wrong and based on ignorance, like most of your arguments here. It is profoundly unfair to blame the EU for this and only mouth-breading retards who gobble up anti-EU shit like starglider would blame the EU when their own country rejects any kind of move towards EU-wide institutions that could budget like a real state.

However, this lack of advanced, accurate planning about who really ought to be paying how much money, and failure to create a system that can amortize these payments over time, should not constitute an emergency on the part of any individual state. If next year it's France that owes extra dues and Britain that receives them, then the same principle applies.

This is golden. "I refuse to let you create a finance ministry" *two seconds later* "How dare you not have an accurate budget or real tax system and how dare you not have a finance ministry planning for years in advance".

Really. Have you been living under a rock that you did not notice how the Brits have resisted any attempt to turn the EU into a more functional system? Because that would result in an EVIL SUPERSTATE, you see. I don't know about you but where I come from people can't refuse to fund the mathematics teachers and then complain about the lack of math knowledge.

Do you disagree with that?

Exactly what factors would have made this predictable, aside from "the EU is factoring in the black market this year?" Because I doubt that accounting for the black market alone would have justified a 20% increase in Britain's dues.

Well, one such thing is the tax on capital gains. This is tied to the stock markets doing well. So that is one huge indicator right there. Likewise, Germany usually knows if it has to pay more or less when the taxes on income and jobs are assessed. So in short, the better your economy is, the more you have to pay.

Or in other words: As soon as Britain noticed their economy was not sliding into a huge recession and that the city was doing exceptionally well all things considered they should have expected to have to pay more. Past examples (Germany 2013 + 15.8%, past years probably even higher considering how well our economy was growing) at least showed the general range such increases could take.

[madd0ct0r]

the EU isn't the one factoring in the black market, the UK Office of National Statistics is.

and to quote the OP article

The additional payment was requested after Eurostat reviewed the economic performances of member states since 1995, and readjusted the contributions made by each state over the past four years based on their pace of growth. The BBC's head of statistics Anthony Reuben said prostitution, drugs and tobacco-smuggling were not included in national income before 2002 when they should have been, under accounting rules. In contrast, prostitution was included in Germany's own national accounts and given that EU budget contributions are based on national income, this partly explains why the UK has been underpaying and Germany overpaying, he added

so one way of talking about it is that the UK has been under-reporting growth for 4 years. If this was Greece people would be even less sympathetic.


to quote Robert Peston:

Analysis by economics editor Robert Peston

How is it that our EU subscriptions are supposedly in arrears?

Well you may recall that the Office for National Statistics recently recalculated the size of our national income to take account of unreported or under-reported parts of the economy, such as research and development, illicit drugs and prostitution.

So thanks in part to the inclusion in the official economy of our productive sex workers, our EU membership fee has been augmented.

Now to be absolutely clear, none of this is a surprise to the Treasury or chancellor. British officials have known for some time that the inflammatory demand from Brussels was coming.

What did catch them by surprise was what it sees as a deliberate leak by EU officials of the news last night - which they see as an attempt to embarrass David Cameron, as he meets other EU leaders to discuss, among other things, his controversial hopes of being able to restrict migration of EU nationals to Britain.

http://www.bbc.co.uk/news/business-29751124


So it seems Call-me-Dave has annoyed enough high level people in the EU they'd quite happily see his election sunk, shoaled on his own rhetoric.