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On 1 December, the British government was in theory hit with an interest rate of over 2% on its €2.12 billion of outstanding EU payments. By 1 January, it will be paying 2.25% in interest; by 1 February, the figure will be up to 2.50%.
Yet in reality, the United Kingdom has little to worry about. It knows the slate, including millions of euros in interest, will be wiped clean the moment that the European Commission delivers on a promise it made to give Britain (and others) some breathing space.
The problem is that doing deals in Brussels always presents an element of risk. That was the case when Kristalina Georgieva, the Commission vice-president for the budget, offered David Cameron, the UK’s prime minister, a dignified way out of paying his €2.12bn EU bill when it was due, because the European Parliament did not hesitate to use the situation to gain political leverage.
Georgieva’s reasoning was relatively straightforward. As a result of highly complex budget calculations, the UK found itself in the unenviable position of having to pay an unusually large amount of money into the EU’s budget.
While the figure of €2.12bn should not have come as a complete surprise to British diplomats, it is true that the annual adjustment of the financing of the EU budget is notoriously fickle.
The amount that each government has to pay is linked to the gross national income (GNI) and the value added tax (VAT) that it collects. But both of these are linked to statistics that merge both estimates and final data, meaning that they need to be constantly updated.
Full article on European Voice (subscription required)