In for a penny, in for a trillion

The news that the EU seeks a budget of £1 trillion between 2013 and 2020 inspired disbelief rather than ire. President Barroso’s almost childlike insistence that the proposal was ‘relatively small’ was amusing, certainly not alarming. It’s a classic EU trick: pitch for 5 per cent and a string of crazy financial measures (including a ‘Tobin tax’ on financial transactions) in the hope obtaining more modest gains of say 2 per cent. Barroso will also throw the odd concession into the bargain: the announcement of a £5.4bn saving on the Commission’s staffing costs represents a concession.

But, Barroso has his work cut out to secure even a 1 per cent rise on this occasion. David Cameron failed to stop Brussels’s last money grab during the negotiations to adjust the 2011-2012 EU Budget, but he did secure the signatures of 13 member states, including those of France, Germany and Holland, to reject anything but a 0 per cent real terms rise for the 2013-2020 Budget round. Barroso’s other plans look like being frustrated too. The Commission wants to introduce a ‘general system of rebate’, an attempt to lay another finger of member states’ budget sheets. Britain and Holland will reject that plan, preferring that rebates remain tailored to individual requirements. And Barroso’s proposed Tobin tax is, in the words of one official, “a complete non-starter” because even France and Germany acknowledge that to introduce a tax unilaterally would be suicide in today’s economic climate

Barroso will fail if these various alliances hold, although there will be fears that the Euro’s implosion may weaken Germany and France’s resolve to challenge the Commission, favouring solidarity at this critical time for ‘the project’. The British government is, however, confident of success. As one aide put it, “No British government has been in a stronger position” going into a Budget round. Besides, as James reveals in his magazine column this week, the signs are that Hilton&Co are moving towards the conclusion that Britain is “better off out than in”. That sentiment will harden if it looks like Barroso might win against the odds.