21 October 2012

FT: Merkel to warn UK on Europe budget veto

Germany is planning to warn Britain that it will seek to cancel next month's European budget summit if Prime Minister David Cameron insists that he will veto any deal other than a total freeze on spending.

Angela Merkel, Germany’s chancellor, does not believe there is any point in holding the budget summit to agree on a seven-year framework for EU spending if Britain intends to veto any deal.

Ms Merkel is trying hard to persuade Mr Cameron to back a German compromise that would cap EU spending at 1 per cent of European gross domestic product. The European Commission has proposed a figure of more than €1 trillion for the years 2014 to 2020, or nearly 1.1 per cent of European GDP. After last week’s summit, Mr Cameron bluntly stated his willingness to veto any deal involving increases in EU spending. “If there isn’t a deal that’s good for Britain, there won’t be a deal”, he said. “We can’t have European spending go up and up and up when we are having to make difficult decisions in so many different areas.”

Ms Merkel has sought to persuade Mr Cameron that she will stick to the letter of the German compromise, and not use it as a starting point for negotiations to raise the budget ceiling further. But the officials say that she is not very optimistic about the chance of success.

Some 15 other countries, known as the “cohesion group”, back the European Commission’s proposals for a bigger budget to provide more money for spending to boost competitiveness and economic development in the poorer Member States.

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