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Britain’s EU rebate under threat

The EU budget commissioner has warned the UK’s EU rebate is under threat.

Janusz Lewandowski, the EU budget commissioner, told German business paper Handelsblatt that the rebate for Britain has “lost its relevancy”.

Former Prime Minister Margaret Thatcher negotiated the British rebate in 1984, a 66 per cent discount on payment of contributions which gives the UK a special status compared to other EU members. Thatcher argued that Britain, with its relatively small agro-industry, would miss out on agro-industry aid paid to other member states. France, for example, was one of the countries that benefited most from those aid payments.

In the next couple of weeks, the EU will start negotiating the long-term financial framework for 2014 to 2020.  The EU needs to make room for other measures, such as financial market authorities.

“We all know that we have to present a realistic budget for Europe,” Lewandowski says. “This means that all 27 member states have to be content with it. There must not be any losers.”

Lewandowski says that some payments, such as support for the agro-industry and for eastern European countries, will have to be cut in order to commit more money to research, development and “global ambitions”.

“The British rebate is likely to be among those measures that are at risk. The volume of the rebate will be cut from around 6bn euro in 2009 to around 3bn in 2011 but I do not believe it is justified anymore.”

“Of course, [the UK government] will defend the right of the rebate,” Lewandowski says. “The negotiations will be difficult but we will have to reach an agreement with London in order to find a solution.”

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