European Union summit turns sour

UK refuses to pay surprise €2.1b bill; Germany, France vow reforms

Brussels: In a vivid display of public fury at European Union technocrats, British Prime Minister David Cameron refused to pay a surprise €2.1 billion bill on Friday as EU leaders ordered an urgent review of how the budget figures were arrived at.

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As Eurosceptics at home leapt on news that the EU executive — a “thirsty vampire” — had demanded a sum worth about a seventh of London’s annual payment after a rare statistical review of national incomes, Cameron demanded action from fellow leaders at a summit in Brussels calling the bill “completely unacceptable”.

He found some sympathy around the table — a visibly furious Cameron told a news conference that Italian Prime Minister Matteo Renzi had also lambasted “bureaucrats without a heart”, who made it harder to persuade citizens of the Union’s value.

“It’s an appalling way to behave,” Cameron said. “I’m not paying that bill on December 1. If people think I am they’ve got another thing coming. It is not going to happen.”

EU ministers will hold an emergency meeting on the issue next month. Cameron said he wanted to understand the technical calculations and was also ready to mount a legal challenge.

EU officials insisted that the revision, which also saw Italy and even crisis-hit Greece asked to pay more while France and Germany would get rebates, was part of an annual technical exercise and was handled by civil servants, not politicians.

But Cameron noted that annual revisions to the payments had never been so great — an effect, EU officials said, of a once in a generation review of how national incomes are calculated that found that Britain was richer than it had previously declared.

That, officials at EU statistics office Eurostat said, was a result in Britain’s case mainly of taking more account of money flowing in 2002-09 to non-profit organisations — from churches and universities to trade unions, charities and sports clubs.

German Chancellor Angela Merkel and French President Francois Hollande also told Cameron the rules must be respected, while the Italian and Dutch prime ministers voiced support for Britain, according to the official.

According to a table sent by the Commission to governments a week ago and seen by Reuters, Berlin and Paris will receive money back while the Italians and Dutch and even Greece, which has been in recession for six straight years, have to pay more.

France and Italy renewed their commitment to reform their economies in the hope of winning more time to bring their public finances in order but the ECB’s president warned more needed to be done to avoid “a relapse into recession”.

After the bloc’s revival came to a halt in the second quarter, France and Italy want to shift course away from the spending cuts that marked the bloc’s response to the 2009-2012 crisis. Germany says debt discipline must continue.

European Central Bank President Mario Draghi told eurozone leaders over lunch that more needed to be done.

“We avoided the collapse of the euro with a joint effort. Now our focus should be to act jointly again to avoid a relapse into a recession,” Draghi said, according to his spokesman, who quoted from his speech. “Hope is not a strategy.”

He said a coherent strategy for economic growth had to involve “concrete and credible” structural reforms.

Laying out a four-pronged strategy, Draghi emphasised that monetary policy was only one part of an economic revival plan, with the others being reforms, sound public finances and healing the bloc’s sick banks.

But despite Draghi’s firm words, the summit underscored how the eurozone has few quick fixes for near record unemployment, leaving it in search of billions of euros for spending that Berlin wants to see come from the private sector.

Merkel said no country with a national debt greater than its economic output should be borrowing more, diplomats said.

 

 

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