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Why David Cameron can threaten to veto the EU budget

30 October 2012

When in 1996 the US Congress threw out Bill Clinton’s Federal budget they precipitated a partial shutdown of the US Government. However, anyone looking at the growing prospect of a UK EU budget veto and cheerfully imagining Eurocrats being shut out of their offices on 31 December 2013 will be disappointed. Because when it comes to EU budgets, a veto is not quite a veto – the EU will continue one way or another to claim its dues.

Nethertheless, a UK veto is not meaningless. Not least because, as we have set out here, the scenarios that could play out after a UK veto may not be that much worse for the UK than those already on the table (including, ironically, the UK’s own suggested ‘freeze’). It is important to realise that a ‘freeze’ in the overall EU budget could actually mean a rise in the UK’s net contribution. This is because the UK’s rebate only applies to spending in the ‘old’ member states and so shifting funds to the newer states would leave the UK out of pocket. We estimate that even under a ‘freeze’ the UK’s net contribution could rise by between €1 billion and €2.4 billion over seven years.

After a veto there are broadly two possibilities. The first is that the EU carries over its 2013 budget ceilings, adjusted for inflation. Member states would then have to negotiate an ad hoc deal, based on a Qualified Majority Vote rather than unanimity, which could see the overall EU budget increase above and beyond anything Cameron wants to see. However, this could actually mean a limited rise in the UK’s net contribution as the rebate reduction would not kick in.

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Secondly, and less likely, the European Parliament could tear up the current budget altogether. Should they do so, the Commission could then table a completely new proposal for the annual budgets without any spending ceilings. These would be subject to QMV and could also lead to a large increase in the UK contribution.  This would also be a major act of hubris as MEPs aren’t exactly popular as it is.

However, a clear majority of member states desperately want a new deal. The new member states would lose out from the previous year’s budget. In addition, all other budget corrections – including the Swedish and Dutch rebates on the UK’s rebate – will expire in 2013, while the UK rebate would stay, meaning many net contributors would also stand to lose if there’s no new deal.

This all gives the UK veto potency which should be used all the way up to 2014 to push for radical reform of the largest spending items such as the Common Agricultural Policy and to repatriate EU regional policy.

Christopher Howarth is senior political analyst at Open Europe.

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Show comments
  • telekuka

    soon the Revolution will be here.

  • Hoot_Gibson

    As Simon Jenkins says in his superb article today in the Guardian:

    “The EU budget is a flatulent confection of national, industrial and
    sectoral lobbies. It has never passed audit and makes Britain’s Ministry of Defence seem a haven of cheese-paring efficiency.”
    Quite the most chillingly true statement yet on the EU budget.

  • Vulture

    ‘Why Cameron can THREATEN to veto the EU budget..’ you say. Sure, we know he can threaten anything. But so long as we, and more importantly the EU know that those threats are empty, since he will never actually DO it, what exactly is the point?
    Cameron looks like what he actually is: a pathetic, blustering empty bladder of a man, a posturing clown whom no-one believes or trusts.
    And he’s our Prime MInister. It’s a cause of national shame.

  • an ex-tory voter

    Just listened to George Eustace MP putting the europhile argument on Radio 4. Stumbling, mumbling, incoherent, pinhead dancing. Truly pathetic, but then, he did have rather an uphill task in arguing for a continuation of the status quo. Cemeron beware, you are going to have to do better in order to convince the electorate you are batting for them and not for Van Rumpoy and Barroso!

  • ScaryBiscuits

    Why are we having ‘to push for radical reform of the largest spending items such as CAP’? The EU agreed 5 years ago that it would do this and in return Blair agreed a 54% increase in our contributions.
    Our negotiating position, therefore, should be that we are due that increase to be returned as the EU has not kept its side of the bargain and that until it does we will suspend all payments because they actually owe us money, all the back payments of our previous increases.

  • Boudicca_Icenii

    All the time we transfer funds to the EU, they will continue to demand more and more. The situation we find ourselves in, where countries who are net beneficiaries from the EU Budget which WE pay, can vote themselves more of our money is simply outrageous.

    The EU are the new ‘Danes’ of our time and when it comes to paying Danegeld, Kipling had it right:
    Forget about reforming the CAP and repatriating regional powers. We must get OUT of the EU.

  • Daniel Maris

    I’d say pathetic, but that gives pathos a bad name.

  • monty61

    All mouth, no trousers just like last time.

    No meaningful veto will be used, and if a veto is used, we can be sure it will be meaningless.

    Remember it’s Cameron we are talking about here, no handbag and not even a Major or Blair type opt-out is on the horizon. Just more rolling over and biting of pillows.

  • David Lindsay

    We are talking about David Cameron here.

    Cameron simply cannot cope with people who cannot even hear an Etonian accent, still less are they intimidated by it. It is beyond him that banging on the table is not a negotiating strategy, or that believing oneself born to rule is not the same thing as being any good at it.

    Look out for another non-veto moment.

    • Mirtha Tidville

      Sadly I have to agree with you…Rhoda had it right at the top…he might have been born to rule but he wasnt given any balls to do it with..

    • HellforLeather

      Insist on a professional audit of EU accounts (which haven’t been signed off by real auditors for many years) before sending more money that way — As Austin Barry said above. How does that not make sense?

  • Austin Barry

    Let’s have a referendum and leave this three card monte scam. First, though, let’s get the EU to audit its financial statements before we discuss the budget. Who does the books -a guy with a green eye-shades and hot and cold running putain in some seedy Marseille bidonville? Madoff had nothing on this preening cadre of ripoff artists.

    • telemachus

      Looks like a referendum may not be needed

      Our system is parliamentary not plebiscite driven as in central Europe
      We could with-hold it all and stick 2 fingers to the Social, health and all other provisions by Christmas

  • @PhilKean1

    “This all gives the UK veto potency which should be used all the way up to 2014 to push for radical reform”

    Based on an assumption that Britain will continue to stay a full member of the EU. Which, as we know, means continued progress towards Federal Union.

    Inconsistent? Well, yes. But they are asking us to believe that Britain can remain semi-detached members of a club that won’t accept anything other than full commitment.

    Time to stop the bull.

    • 2trueblue

      Its all about the money. Our money. We will not get any traction in negotiations until we talk about the money, as in not giving it to them.

  • dalai guevara

    The predicted increase of UK funding of the ‘apparatchik EU’ is peanuts compared to the last rounds of QE2011.1, QE2012.1 and QE2012.2 of combined £175bn, which – when I last looked – did not spill a single penny into my pocket.

    • Fergus Pickering

      Yeah, friend but you forget. We HATE the EU and the chance to screw it up is not to be missed. Some things are more important than money. Like REVENGE!!!

      • dalai guevara

        revenge…for what?

        • Mr L

          Fopr the way we have been screwed for nearly 40 years, thanks to the traitor Heath.

          • dalai guevara

            Without the Treaty of Rome we would have had exactly how many episodes of ‘Auf Wiedersehen Pet?’

  • Rhoda Klapp

    Or they could just forget the rules and do what they like, for which precedents now abound. However, I am not expecting a veto, unless Cam has paid a visit to the bottle bank to make a withdrawal.

    • Gerry Dorrian

      I like it – my own metaphor would have involved a biology textbook with diagrams!

    • Heartless etc.,

      The H2B CAN ….. but the invertebrate WON’T ! – more than his pathetic life and future is worth, – and way too much bother to visit the bottle bank – except to deposit empties.

    • Andy

      True, but then again if they can do that then so can we. I would go for broke and tell them straight out that I would not increase UK contributions unless we specifically agree. If they don’t like it, which they wont, they can stuff it. . . .

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