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EU Budget - Gurgling Down?

Posted on the 08 February 2013 by Charlescrawford

Here's my Telegraph Blogs piece this morning on the news coming from Brussels that mirabile dictu the EU Budget may in fact not grow over the coming seven year financial cycle:

The French have made the usual belligerent noises, feigning to champion increased spending that they too can’t afford. As a net contributor (but unlike the UK with a huge stake in the existing bad pattern of spending skewed towards the CAP) France hoots for more Europe, then gracelessly falls in line behind the tough position determined by the other two largest net contributors, UK and Germany.

But wait. What about the European Parliament? Can’t they refuse to endorse the deal and impose annual budgets at higher costs to UK?

London’s answer to that will be “bring it on!”. If the EU Budget in all its labyrinthine complexity is not agreed at the start of the seven-year spending cycle, it gets far harder for the major net beneficiaries of structural spending (eg Poland and Romania) to plan sensibly. That in turn sharply increases the likelihood that by 2020 they will not have spent their allocations, so the actual spend by the UK and other net contributors is sharply down.

In other words, if the European Parliament tries this on in a clumsy power-grab it will incur the wrath of almost everyone, including MEPs on all sides who, taking their lead from their respective capitals, prefer the certainty of a comprehensive Budget deal now to the horrible uncertainty of annual budgets.

Moral?

In any negotiation of this sort, those who pay in more than they get out decide the final outcome. This time round David Cameron – aided by the shamelessly opportunistic Labour Party in Westminster – has stuck to a firm position of principle that also makes sound economic sense. He is winning a major victory.

In a battle between Givers and Getters, Getters win. It just comes down to how little they want to Give, and how long the Getters want to keep the issues open, trading the hope of further small gains against the certainty in planning that comes from getting the whole boring business over and done with.

The depressing thing is that the EU now staggers on with no move seriously to downsize the role of the CAP in overall shared spending. Plus all sorts of budgetary bungs will have been handed out to get the final package close to approval, so the process is even more squalid and inefficient than usual. None of which helps maintain Europe's long-term position as a world economic force.

Maybe that's exactly how decline has to happen. It's just easier to stick with the sinking ship you know, and gently gurgle downwards with it.


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