Britain’s EU budgets query could jeopardise its rebate

Britain has been warned that if it wishes to reopen the methodology for calculating its contributions to the EU budget, it could be opening a Pandora’s box that could put the controversial rebate in question.

Prime minister David Cameron claimed he knew nothing of the balancing bill received by London earlier this month that showed Britain owed €2.1bn going back over 12 years.

It was one of nine countries, including Ireland, that must pay an additional contribution by December 1, while 18 countries had overpaid and will receive money back. The exercise does not leave the EU with any additional funds.

The European Commission went on the attack when budget commissioner Jacek Dominik spelt out the process showing that the national governments and their statistical agencies were fully involved in it.

He said they all agree the methodology and then apply it. It was never questioned in the past and it would be difficult to do it now.

To do so would “open up a Pandora’s box” as in mid-May the UK is to receive an increase of €500m to its annual €5.9bn rebate, he said.

Every year at this time the national agencies, including the CSO in Ireland, work with Eurostat to agree their gross national income figures for the year on which their EU contributions are based. They also amend those for previous years to bring them into line with the facts once they are known.

If there is an area over which they cannot agree, they leave it outstanding with a “reservation” on it and eventually agree on a solution.

Because Eurostat had just come to the end of agreeing a massive overhaul of how GNI is calculated, a number of countries also settled their “reservations” leading to a much larger than usual balancing of accounts, Mr Dominik explained.

Mr Dominik said he was very surprised by the reaction as normally Britain is such an expert in budgets and very active in checking the figures from the European Commission. Britain raised other issues about the EU budget at a ministerial meeting recently, but not this issue.

If the money is not received by December 1, interest will be charged on the sum owed under legislation agreed by all member states.