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UK faces punitive interest charges if Cameron ignores £1.7bn EU bill UK faces punitive interest charges if Cameron ignores £1.7bn EU bill
(34 minutes later)
David Cameron’s refusal to pay a European budget surcharge of £1.7bn by the end of the month will incur punitive extra costs, with interest charged instantly on a rising monthly scale, the new European commission warned on Monday on its first working day in office.David Cameron’s refusal to pay a European budget surcharge of £1.7bn by the end of the month will incur punitive extra costs, with interest charged instantly on a rising monthly scale, the new European commission warned on Monday on its first working day in office.
Margaritis Schinas, spokesman for the new commission chief, Jean-Claude Juncker, said the monies would have to be paid by 1 December, although political efforts were under way to reach a deal.Margaritis Schinas, spokesman for the new commission chief, Jean-Claude Juncker, said the monies would have to be paid by 1 December, although political efforts were under way to reach a deal.
The deadline was binding, Schinas said. “Everybody has to pay what is due.”The deadline was binding, Schinas said. “Everybody has to pay what is due.”
The new EU budget spokesman, Jakub Adamowicz, said an interest rate of 2.5% would be applied to the outstanding debt from 1 December, rising by a quarter of a percentage point each month.The new EU budget spokesman, Jakub Adamowicz, said an interest rate of 2.5% would be applied to the outstanding debt from 1 December, rising by a quarter of a percentage point each month.
George Osborne will lead the charge against the levy at a meeting of EU finance ministers in Brussels on Friday, two weeks after the budget payments dispute erupted at a Brussels summit. As senior diplomats and officials in Brussels insisted on Monday that intensive efforts were under way to strike a deal, the chancellor issued a blunt warning that the EU was not working for Britain.
Speaking on Newsnight on BBC Two, Osborne said: “Britain joined for economic reasons, and when it’s not working economically for Britain that’s why we get this debate about the membership of the EU and the nature of that membership.
“I’m someone who wants to stay in the EU,” he said. “I think that’s right for Britain, but it has to be a reformed EU.”
The chancellor, who fears that Britain may face renewed immigration from southern Europe if the eurozone falls into another crisis, defended Downing Street’s plans to impose restrictions on migrants from current member states.
He said: “You can either ignore the popular disquiet with things in which case you become irrelevant, or you can say actually I’ve got answers.”
Berlin rejected out of hand any proposals to limit free movement – one of the founding principles of the EU in the 1957 treaty of Rome. Angela Merkel’s spokesman, Steffen Seibert, said at the German government’s weekly press conference in Berlin: “The higher principle of freedom of movement in general should not be meddled with. We view that as an important European achievement. That is the government’s position, which hasn’t changed since the European Council meeting.Berlin rejected out of hand any proposals to limit free movement – one of the founding principles of the EU in the 1957 treaty of Rome. Angela Merkel’s spokesman, Steffen Seibert, said at the German government’s weekly press conference in Berlin: “The higher principle of freedom of movement in general should not be meddled with. We view that as an important European achievement. That is the government’s position, which hasn’t changed since the European Council meeting.
“It is up to Britain to work out what role it wants to play in future in the European Union. This is not a bilateral matter between Germany and Britain but between Britain and all of its European partners.”“It is up to Britain to work out what role it wants to play in future in the European Union. This is not a bilateral matter between Germany and Britain but between Britain and all of its European partners.”
The UK government’s more immediate challenge is to reduce the £1.7bn demand from the European commission. Any relaxation of the rules would require a qualified majority among the 28 governments – many of which stand to receive money back from Brussels under the budget recalculation. It would also need a prompt revision of the legislation, which would also have to go before the European parliament, suggesting the dispute will not be settled by the deadline.The UK government’s more immediate challenge is to reduce the £1.7bn demand from the European commission. Any relaxation of the rules would require a qualified majority among the 28 governments – many of which stand to receive money back from Brussels under the budget recalculation. It would also need a prompt revision of the legislation, which would also have to go before the European parliament, suggesting the dispute will not be settled by the deadline.
On 17 October the commission presented a €2.1bn (£1.7bn) surcharge bill to the British based on the UK’s gross national income figures, which showed that the UK economy had been performing better than previously reported.On 17 October the commission presented a €2.1bn (£1.7bn) surcharge bill to the British based on the UK’s gross national income figures, which showed that the UK economy had been performing better than previously reported.
At a Brussels press conference following the summit, Cameron raged at the European commission and pledged not to pay the bill by the deadline. That pledge was repeated on Monday. The prime minister “rejects the scale and the timetable for this payment”, said a Downing Street spokeswoman. Cameron also said he had demanded and obtained an emergency meeting of finance ministers on the issue. But this Friday’s meeting is routine.At a Brussels press conference following the summit, Cameron raged at the European commission and pledged not to pay the bill by the deadline. That pledge was repeated on Monday. The prime minister “rejects the scale and the timetable for this payment”, said a Downing Street spokeswoman. Cameron also said he had demanded and obtained an emergency meeting of finance ministers on the issue. But this Friday’s meeting is routine.
The interest on the outstanding surcharge is calculated at two percentage points above the central bank’s repo rate – in this case the Bank of England and 0.5% – meaning a rate of 2.5% from 1 December.The interest on the outstanding surcharge is calculated at two percentage points above the central bank’s repo rate – in this case the Bank of England and 0.5% – meaning a rate of 2.5% from 1 December.
“On 1 January, if payment not made, we add 0.25% so the rate becomes 2.75%, where it remains for that month. The next month it becomes 3%, then after three months 3.25% and so on. By a year of delay, the rate is 5.5%,” said Adamowicz.“On 1 January, if payment not made, we add 0.25% so the rate becomes 2.75%, where it remains for that month. The next month it becomes 3%, then after three months 3.25% and so on. By a year of delay, the rate is 5.5%,” said Adamowicz.
“Each member state has to pay what is due and this automatically impacts on the budgetary contributions of all the other member states,” said Schinas.“Each member state has to pay what is due and this automatically impacts on the budgetary contributions of all the other member states,” said Schinas.