UK deal over €2bn EU bill

Fundamental rules on how member states’ pay into the EU budget are being changed after Britain objected to a €2bn bill they received for money due over the past 12 years.

They will now be able to pay it in instalments over the next nine months rather than paying the full amount by December 1, as will the other eight countries that owe money and they will not incur interest on the outstanding sums.

Finance Minister Michael Noonan said €6.5m Ireland owes would be paid on time.

British chancellor George Osborne claimed after the meeting where the new rules were agreed that he had managed to halve the sum to be paid and would not be liable for interest.

Mr Noonan said this was not the case and that Britain would have to pay the full sum and right-wing fringe party Ukip accused Mr Osbourne of “taking people for fools”.

Budget Commissioner Kristalina Georgieva explained that Britain would be able to offset the sums due against the rebate the UK traditionally receives from the EU’s budget each year.

The new regulation that will allow countries pay in instalments will apply when the amounts owed to the EU reach €5bn more than the expected sum, and will be available to countries that owe more than a sixth of their annual contribution.

The extra €9.5bn in the EU’s budget this year was exceptional and came about as a result of national statistics offices agreeing with Eurostat to change the way they calculated their gross national income (GNI). Member states’ contributions to the EU is based partly on their GNI.

Nine countries owe more money while 19 are due money back. None goes to the EU and all will be redistributed to member states. But those due money will only be paid as the debtors settle their bills.

Ireland’s bill increased partly because the CSI agreed a higher sum for the amount of money in the economy from illegal activities such as cigarette smuggling, drugs and prostitution. It was put at 0.73% of GNI.

Britain had a similar situation but also had a long standing disagreement with Eurostat going back 12 years about the value of charities, NGOs and research and development to the country’s wealth.

They agreed with Eurostat this year and its value was backdated to 12 years.