UK rebate not on table Cameron tells leaders

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David Cameron yesterday warned fellow European leaders that he would not accept any reduction in Britain’s EU rebate.

On the opening day of a European summit, the Prime Minister launched a pre-emptive strike to defend the reduction in the UK’s contribution won by Margaret Thatcher in the 1980s.

The main focus of the gathering in Brussels is an ambitious long-term plan by senior EU officials to resolve the problems of the eurozone involving a significant pooling of powers by the 17 members of the single currency bloc.

However, Mr Cameron used a preliminary discussion on the next EU budget for the period 2014-20 to make clear that the £3 billion annual rebate would not be on the table.

A UK official said: “That is not an issue we are willing to negotiate on.

“We think that as we go into this process it is important people have absolute clarity about our position.”

The warning came as officials sought to damp down the prospects for progress at the summit, after German Chancellor Angela Merkel and French President Francois Hollande failed to bridge their differences over the way forward for the eurozone.

The long-term plans on the table call for a banking union, a fiscal union and – ultimately – a political union for the eurozone to shore up EU integration.

While Britain would not be involved in any fiscal union, the Prime Minister made clear that he would keep the UK out of the banking union, while safeguarding the single market.

Mrs Merkel is insisting on maintaining rigid rules on job cuts, tax rises and repayment terms for those countries benefiting from multibillion-euro bailouts – largely funded by Berlin.

Mr Hollande has said the demands are so tough they are stifling all prospect of growth and recovery in the struggling eurozone states.