Chatham House: Independent thinking on international affairs

International Affairs

A high price to pay? Britain and the European budget

James Spence, November 2012

One of the toughest issues at the time of UK accession to the EEC was the cost of being a member of the European club. The nature of the industrialized British economy ensured that the benefits of initial access were less pronounced than in other, longer-standing member states and quickly became a source of heated debate. Margaret Thatcher fought to get 'her money back' in the 1980s and the ensuing British rebate has become totemic for British politicians. As the European Union debates its next multi-annual budget, why has the budget proved so tricky for the UK? What are the drivers for the EU budget? And what is the rebate all about?

This article argues that the UK has tugged in different directions over the EC — now EU — budget, which amounts to about 2 per cent of the Union’s public expenditure. At times the UK has urged member states to improve financial management. At times it has pressed for greater redistribution between rich and poor regions through the budget. It has consistently criticized the large proportion of the budget going to support agriculture in the Union. It has, from the earliest days of its accession negotiations, argued about how much it contributes to the EU budget and how it should contribute less, whether it counted among the poorer or the richer member states. Britain has argued first for restraint, rather than promoting certain policy sectors in a consistent manner. While cohesion and competitiveness targets outlined in the 2000 Lisbon Strategy received strong support from the UK government and the Europe 2020 goals set concrete growth targets in line with the UK's own, this policy-shaping is tempered by constraint and restraint, and has not allowed the UK to draw full political benefit from the EU budget.

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