EU 2012 budget: UK says 2% increase is 'excellent deal'

The spending plans are paid for by national EU budget contributions

The government says it has helped secure an "excellent deal for the UK" following its negotiations over the 2012 EU budget.

The spending plans were set at an inflation-only rise of 2% to 129bn euros (£110bn) after 15 hours of talks.

Euro-MPs and the European Commission wanted more than double the increase.

But they were defeated by governments including the UK, which insisted they would not allow EU rises while imposing national spending cuts.

Euro-MPs had demanded a 5.2% budget rise arguing EU policy spending - most of which is redistributed in the member states in grants and subsidies - can take up the slack of national budget cuts in many areas.

Last month, Europe minister David Lidington called the proposed rise in the long-term budget "astonishing" and Prime Minister David Cameron has also said hard-pressed Britons would not understand anything above an inflation-only rise in euro spending in the foreseeable future.

An 11% rise would, according to Treasury estimates, add an extra £1.4bn (164bn euros) a year between 2012 and 2020 to the UK's contributions to the EU budget.

The only concession - which the UK voted against - to the Commission and MEPs was an "amendment" to the 2011 budget to make available up to 200m euros (£170m) extra.

EU Budget Commissioner Januz Lewandowski said the agreed deal was "clearly an austerity budget" and warned Brussels may not have enough money to meet all its financial commitment to recipients of its funds next year.

'Inflation-busting proposals'

No deal on the long-term budget is likely before the end of next year, but British ministers anxious to put down an early marker of belt-tightening are now buoyed by the 2012 budget result.

Financial Secretary to the Treasury Mark Hoban, representing the UK at the negotiations, said the decision was a victory.

"We have stopped the European Commission and European Parliament's inflation-busting proposals and have delivered on the government's promise to freeze the EU budget in real terms," he said.

"Throughout this process, we have argued that, with member states facing tough decisions on spending at home, we could not afford these unrealistic demands.

"This settlement is far below the 5.2% the European Parliament wanted and the 4.9% proposed by the Commission. It is also 12bn euros (£10.3bn) less than the maximum ceiling agreed in 2005."

He added: "We will also be fighting hard with like-minded member states against unaffordable rises in the next seven-year budget."

But UKIP leader Nigel Farage said the government was "dressing a defeat up as a victory".

"Time and time again this government has promised that it will fight EU budget increases. Time and time again we are told that a reverse is victory.

"This 2.2% increase equates for Britain an increase in our contributions to Brussels of £350m (409m euros). Will Mr Cameron tell us which services he is planning to cut to make up the shortfall - will the NHS be hit, will it be education, will it be policing?"

Euro crisis 'opportunity for UK' to reclaim powers - PM

David Cameron: ''What kind of Europe do we want?''Labour 'would consider EU powers'Cameron denies coalition EU split Cameron defeats rebels on EU vote

The current turmoil in Europe is an opportunity for the UK to "refashion" its relationship with Brussels, David Cameron has said.

In a speech in London, the prime minister argued powers should "ebb back" from Brussels to Westminster as part of "fundamental" future reform.
Although the EU is "out of touch" on many issues, he said it is not in the UK's national interest to exit.
The PM is under pressure from many of his MPs to renegotiate UK membership.
Some Conservatives want to go further and leave the EU altogether.
The prime minister's authority was directly challenged last month when 81 Tory MPs defied the leadership and voted for a referendum on the UK's continued place in the EU.
'Outward looking' Mr Cameron used a major foreign policy speech in the City of London to argue that the eurozone financial crisis has challenged longstanding assumptions about how the EU should evolve and its 27 members must now ask what kind of union they want in the future.

Analysis

Robin Brant Political Correspondent, BBC News

It was a speech heavy on the criticism, but there was little in the way of concrete solutions to Europe's current woes.
David Cameron said the EU is an organisation in peril. It was out of touch and he blamed it for pointless interference.
The comments will be welcomed by eurosceptics in his own party who have pushed him to do more to rebalance the relationship between EU institutions and parliament.
But the UK will not be leaving, he said. Britain must stay in the EU so it can retain its influence over the open and free markets that Mr Cameron said he wants to see more of.
The reality is that the UK is not in the Euro, so not in a position to have huge influence over its fate. However, the prime minister believes stability and an end to the debt crisis is crucial for any chance of a recovery in the UK economy.

Claiming that the EU is too often seen as an "abstract end in itself" and detached from economic reality, he outlined his vision for a more "outward looking", "flexible" and "diverse" union which puts advancing its citizens living standards above all else.

"We have a right to ask what the European Union should and should not do and change it accordingly," he said.
"As I said, change brings opportunities. An opportunity to begin to refashion the EU so it better serves this nation's interests and the interests of its other 26 nations.
"An opportunity, in Britain's case, for powers to ebb back instead of flow away and for the European Union to focus on what really matters to underpin prosperity, stability and growth.
"That is the kind of fundamental reform I yearn for."
Staying inside Mr Cameron has been urged to spell out what powers he wants to claw back from Brussels and when negotiations on this might begin but he has appeared to rule out such a possibility in the short term and his Lib Dem coalition partners are wary of such a step.
But Tory MPs have said negotiations on amending EU treaties to allow for closer fiscal integration among eurozone members could start as early as next month and the UK must be prepared for this.
In his speech, the prime minister warned that Europe is "slipping behind" other economic powers and that unless it becomes more competitive, it will remain a "continent in trouble".
But he insisted that the UK's future remains within the EU, not outside it.
"Leaving the EU is not in our national interest," he will argue. "Outside, we would end up like Norway, subject to every rule for the single market made in Brussels but unable to shape those rules.
"Believe me, if we weren't in there helping write the rules they would be written without us - the biggest supporter of open markets and free trade - and we would not like the outcome."
'We sceptics' The BBC's political correspondent Robin Brant said this was a strong message about what the PM saw as the limits of ever-closer union with Mr Cameron referring at one point to "we sceptics".
Labour indicated earlier on Monday it was prepared to consider the case for "rebalancing" the division of powers between the UK and Europe but said this should not be a priority amid continuing efforts to stabilize the euro and the need to secure the future of the single market.
Shadow Treasury minister Chris Leslie said despite Mr Cameron's rhetoric, the government had actually been "sitting on the sidelines" in crucial debates about Europe's future.
In a wide-ranging address, the prime minister also defended the UK's intervention in Libya and said the new Libyan authorities had found evidence of chemical weapons hidden by the Gaddafi regime.
He also revealed that the UK plans to host an international conference on Somalia next year, saying it is a "failed state that directly threatens British interests".
The event will look at ways of dealing with piracy off the coast of Somalia, protecting ships in the Gulf of Aden, challenging extremist groups in Somalia and the risk of UK citizens being radicalised there.

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Saturday, 19 November 2011