Britain’s rebate – a European view
So, the thinking runs, a mate of yours has fallen on hard times, but still wants to be a member of your local club. Only trouble is they can’t quite afford the membership fees, and as they don’t smoke they don’t have the benefit of the club’s free cigars. So you and the other members chip in and give them part of the membership fee back as an act of good faith and to reimburse them for their lack of cigars. After a few years, your mate seems to be doing pretty well – spanking new suit, charging off all round the world, flashing the cash about with big charity donations. But you and the other club members are still giving him money, even though he’s now richer than pretty much all of you. You’d feel pissed off, wouldn’t you?
Yep, Blair’s off defending the British EU rebate – that little deal arranged by Maggie in 1984 to counter payments to the Common Agricultural Policy which the UK wouldn’t see returned thanks to our weak farming sector. It’s worth £3 billion, so you can see why everyone’s het up about it.
The thing is – if we’re honest for a bit – it’s actually now rather unfair on the rest of the EU. (And no, this isn’t another excuse for sceptics to crop up and spout off about how we shouldn’t be giving any money to the EU anyway – that’s just tedious and not the point.)
In the year the rebate was negotiated – miner’s strikes, depression, the tail-end of a decade of economic and industrial decline, rising unemployment etc. etc. – Britain was in a pretty shoddy state. In fact, at that stage of the EU’s (then EEC’s) existence, of the ten member states Britain was the third poorest. Today the UK has the 7th largest GDP in the world.
Now the EU not only contains the likes of 87th highest GDP Slovenia, but France has slipped to 20th, and every country in the EU bar Germany now pulls in less cash than the UK. Payments, the thinking runs, should be proportionate to ability to fork out the cash. That way, just as Britain benefitted in the early 1980s, so the likes of Slovenia can benefit today.
But Blair’s off defending the rebate anyway – and good on him, as it’s blatantly in Britain’s national interest to keep the thing. It’s also a damn good bargaining chip.
The only trouble, if you’re one of those who sees the UK rebate as a scared cow, is that when Thatcher said “No” to renegotiation, you knew to believe her. And she was too damn terrifying to try to change her mind to boot. With Blair it’s practically impossible not to start squinting to see if he mutters “for the time being” under his breath.
Anyway, he’s doing a good job and hitting all the right notes so far:
“over the past ten years, even with the British rebate, we have been making a contribution into Europe two and half times that of France. Without the rebate, it would have been 15 times as much as France… The reason why the rebate exists is because otherwise there would be this quite unfair proportion of British contribution. The reason for the unfairness is because the spending of Europe is so geared to the Common Agricultural Policy.”
Go Tony… He’s right, of course. Both on his figures and the cause of the problem.
But a Britain/France spat is not what the rebate issue is really all about. The issue is about helping the less well-off members of the EU to get to a comfortable level, just as the rebate helped Britain to. It seems rather odd, in a week where Blair’s been trying to wipe out poverty in Africa, that he can then charge off and try to maintain a system which, while doubtless helping Britain, simultaneously threatens to damage some of our less well-off EU partners.
Still, maybe he’s got something more cunning planned. The rebate, combined with the ongoing constitutional nonsense, gives Blair a rather good bargaining position. The only worry is, has he got the skills to use this? If he REALLY wanted to get somewhere he’d threaten to pull the UK out of the CAP. But he’s too much of a pussy. Lucky for him he’s got Brown as back-up. When Brown says “No” he means it. A little bit more, at any rate.
Your GDP ranking stats are blatantly nonsense as it seems to me you are mixing up Total GDP and GDP/capita to suit your argument.
Nope – all are total GDP. Unless I ballsed up by mistake. Certainly no deviousness there.
Your club analogy is nice, but it doesn’t really fit. You see, even after all these years of spanking new suits and charitable donations, the club still isn’t letting us at the free cigars. It’s not the club’s fault – how are they to deal with that tragic accident all those years ago that left our lungs in a terribly fragile state? And it isn’t as if we aren’t chucking a lot of cash into the cigar kitty from time to time now, even though we still don’t smoke ’em. What to do, eh? Perhaps it would be best if we just quietly resigned from the club? Of course, then there would be less cigar money all round, as the amount we stick in the kitty is quite large…
After our messianic leader stated in Prime Minister’s Questions in the House of Commons on 8th June:
One might have believed that the issue was safe, but no, now we hear:
So what now? Are we to have a massively reduced rebate on the promise of CAP reform or a complete ‘U-turn’ & yet again Britain gets shafted?
Pathetic.
On a linguistic note, while I’m very guilty of importing americanisms, I’m surprised that nobody has remarked that British English has no such thing as a period, unless TB has taken to chatting about menstruation in public. He means, of course, full stop. I hope.
Andrew – but the club would argue that there’s no such thing as a “cigar kitty”, but that the cigars are merely paid for out of the membership fees. They’d also argue that there are now a lot of new members who’d really like – even need – a nice fat cigar, but the club can’t afford to let them have any.
And in any case, they’d say, thanks to the higher membership fees paid by some of the richer members, these members get to have a bit more say in the drawing up of the club’s new rules. It’s not the club’s fault that a couple of the oldest members are rather stuck in their ways and don’t want to vacate their comfy leather armchairs by the fire and help bring the new rules into force, after all.
Oh, and Katie – I think Simon Hoggart picked up on that in his Guardian sketch yesterday. A truly hideous Americanism that…
I think you are mixing up GDP & GDP per capita
These figures show that the UK & France haver very similar total GDP:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29
The same pattern is true if this is expressed in terms of purchasing power parities:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29
And on a per Capita basis, the UK is only 8th in Europe, with France not far behind (less than 4% lower):
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita
Plus, you article makes it sound like the rebate means we are a net recipient of EU funding – this is not the case; the UK is, even after the rebate, a net contributor to the EU budget.
The UK’s net contribution to the EU budget is 2.5 times more than France’s – yet France’s economy (as shown in the stats above) is virtually the same size as the UK.
The original reason for the rebate (most of the EU budget goes on agriculatural support and we have a small agricultural sector) still applies.
There is a debate to be had about the EU budget – but all Chirac is trying to do is deflect public opinion in France away from his own failings and blame the UK.
My figures say Britain and France’s GDP is roughly equivalent. I think something might have gone awry there, NM. Not sure it changes the substance of your argument, which I essentially agree with. Andrew: that’s a false position, though. I believe we’ve discussed/argued this before. If the UK withdraws from CAP, then you have a point. Either we’re in or out.
Thersites: sorry, I disagree. If Blair can get something concrete in return for the rebate, if he can get movement on the CAP (backed up by newer members who have nothing to gain from it), then he will have done more good for Britain, Europe and the world than a decade of all parties throwing the toys out the pram. To start negotiations (on anything) with a ‘Non’ is stupid. I would suggest waiting to see what happens before pronouncing your judgement. Likely, nothing at all, on either.
Katie
In pedantic mode — from The Chambers Dictionary (Ninth Edn)
& from the OED:
So it seems that the americanism has been accepted by authoritative British dictionaries.
Huh. Good to know. I’m working on the second person plural “y’all.” I second Jarndyce, I’d like to see everyone being a little more magnanimous in their own back yard.
GDP-wise (and this isn’t where I initially got the figures), the CIA World Factbook places France at $1.737 trillion ($28,700 per capita), Britain at $1.782 trillion ($29,600 per capita).
Not major differences between Britain and France, certainly – but a difference nonetheless. Slovenia, however, is only at $39.41 billion ($19,600 per capita) – significantly less. And the rebate is really meant to be all about helping the poorer countries like Slovenia.
The basic problem on the Britain/France thing is that the UK pays out substantially more than France. On this we can all agree.
The problem, however, is not that Britain pays too much for its relative economic clout (Germany, slightly better off despite its dodgy economy, still pays a bit more), but that France pays too little.
That is what the rebate argument is actually about – the EU needs the extra cash that we get back via the rebate but is too worried to tell France that they ought to pay more. As the rebate looks so massively unfair to most of the rest of the EU (although, as the quote from Blair I used above demonstrates, there’s a good argument the other way too) it’s a very easy target.
The question is whether Blair/Brown and co have got the diplomatic 5k177z to swing the blame onto the French, which is where (as so often with EU problems) it actually lies. Post-referendum this could be very dangerous from a pro-EU point of view. But it depends what the current British game plan is. Assuming there is one…
J: Possibly. I was disputing the analogy, rather than the substance of the argument, really. If the CAP is up for negotiation, I’d be the first to call for the rebate to go.
Nosemonkey: It’s not the club’s fault that a couple of the oldest members are rather stuck in their ways and don’t want to vacate their comfy leather armchairs by the fire and help bring the new rules into force, after all.
Well, perhaps not, but the club’s rules are posted on the door. It seems a bit odd to have joined under that set of rules and now disputing them?
Anyway, enough of the analogy games.
Jarndyce:
If Blair can get something concrete in return for the rebate, if he can get movement on the CAP…
Two very big ifs &, if the current remarks of President Chirac along with the history of French representatives in defending the CAP are taken seriously, then Blair will not succeed in his stated aims & either will be seen to be playing the ‘perfidious Albion‘ role or Blair will give in.
“The issue is about helping the less well-off members of the EU to get to a comfortable level, just as the rebate helped Britain to.”
Wonderful notion, but Britain’s economic catch-up with the rest of Europe, while certainly not hurt by the rebate, probably had a tiny wee bit more to do with, say, restoring macroeconomic stability, product and labour market liberalisation, and the shift of the political centre which reduced the risks attendant on investment.
The record of structural funds in driving economic development anywhere (East Germany, chronically) is not great. And in fact, anybody who’s seen first-hand the industry that gets created by European structural funds might have good reason to suspect that it’s a lot better about talking about development than creating any…
(That’s not to say you’re wrong, by the way, only that you’re overstating your case. Although obviously, the rebate is sacred and any threat to it is reason enough to put the Trident submarines on high alert.)
Overstating the case? Moi? Heaven forbid! Pub now. Interesting (and confusing) this whole rebate thing, at any rate.
Hear what you say, Blimpish, but as the Service Commanders would comment, it’s a ‘target rich environment’ out there! Paris as primary, with Berlin and Italy as secondaries, three megatons on each ought to sort out the wobblies and bring the sheep back into line.
Trouble is, we joined up late, and the French and the Germans made all the rules, so when they see someone getting a slider past them by using the rules, they don’t like it at all! The French farmer rules absolutely, and any attempt to chop their subsidy is gonna’ be a fight which might need nukes before it’s over!
Your GDP figures are way off. According to Wikipedia, France is 5th at current exchange rates and 7th at PPP, not 20th.
OK so the rebate is primarily there because of our CAP payments, right?
And Blair wants to eradicate poverty (in Africa, and maybe in eastern Europe too), right?
Well it seems to me that he should offer to give up the rebate, in return for the CAP (and CFP), and European tariffs on African agricultural products being abolished. As this would probably have a rather coal-miner-ish effect on Britain’s farmers, he should offer to pay them all some handsome redundancy; perhaps he could get this redundancy money by not giving “aid” to Africa. He won’t need to, as Africa should be able to become pretty rich, or at least self-sufficient, without the CAP in place.
The effect on agri-rich places like Poland (and, um, Turkey) would be mutually beneficial too.
Maybe that’s just pub talk, but it sounds reasonable to me, apart from the fact that the French et al will never allow it.
We could always grow a unilateral spine and say that there will be no tariffs on imports of agricultural produce from any Commonwealth country into the UK.
Phil – Meh – must have read ’em wrong. But the point that Britain is now substantially better off than it was in the early 80s, and is better off than most other EU member states, still stands (and no, obviously that isn’t all down to the rebate).
Tim – I’d be up for a decent chunk of your suggestions. Negotiating a debt wipe-out and an increase in aid is one thing, but the CAP is the single biggest evil of the whole EU. It’s not only buggering up intra-EU relationships thanks to the immense resentment it builds up, but is also utterly and relentlessly screwing the worse-off countries throughout the world. Not a fan, over here.
I am, as you may have guessed from the title of my blog, a Eurosceptic.
I personally would forgo the rebate in exchange for the total elimination of CAP and a sensible redistribution of who pays what and who recieves what.
I see no other reason to give a single penny up otherwise.
I would prefer that we didin’t pay a penny, but that is irrelevant to the discussion here.
The trouble is that the EEC, as it was in 1957, was founded with the compromise that Germany got the market & France got the CAP. Those are the conditions that Britain joined under.
Since the CAP is a problem for the EU why not take it out of the EU’s influence? France could have some form of derogation & take it back as a national policy, to be continued or adjusted as the French see fit. Thus no hassle at the EU level & then Britain’s rebate can be put on the table & decided in terms of that grim phrase:
It’s all very well banging on about the annual sums: don’t forget that we gifted them all a huge capital sum at entry viz our fishing waters. I’m amazed that no one ever points out that much of rural Scotland stopped voting Tory only after E Heath did that dirty deed.
dearieme: Though traditional fishing areas, now declined, of Britain (Cornwall, Devon, Grampian coast) now elect MPs from the two most strongly pro-EU parties: Lib Dems and SNP.
I’m just becoming interested in how the EU manages its money.
I just noticed that the Netherlands with about 16 million people gives almost as much as France who has over 61 million people.
Shouldn’t the Netherlands be screaming about this?
mmorgan – they are – a resounding “Nee” in the referendum and growing euroscepticism.
It looks like Blair’s going to be going on about EU payments for a while – this could potentially turn into the *actual* EU crisis after the last couple of weeks of phoney crisis post-referenda. A proper Britain/France clash over payments has been on the cards for years – and if Britain can get other countries on its side (the Netherlands and Germany are good candidates, considering their payments, but a number of others also aren’t getting an especially good financial deal in comparison to France) something interesting and long-overdue could well happen.
Irritatingly, however, Telewest have seen fit to bugger up my interweb connection, so I’m finding it rather hard to follow and find out more about what’s going on.
(also posted to your blog..)
No offence, NM, but as others have hinted, your GDP claims in this piece are utterly confused and strikingly illiterate. Enough to make one doubt everything else you say.
For the record, the UK has by some reckonings the fourth largest total GDP in the world, by some other reckonings (by purchasing power parity) the fifth or even sixth. Most economists, however, would say we are fourth – though about to be taken over by China.
Then you claim that France has the twentieth largest GDP in the world. What the F? Whether it’s total GDP or GDP per capita France is just behind the UK. Do you mean its twentieth in terms of GDP per capita? If so why are you comparing it with Britain’s seventh, when Britain is probably about fifteenth or eighteenth in the world, in terms of GDP per capita. Or are you talking about total GDP?
Actually, I think you haven’t even grasped the difference between total GDP and GDP per head. Have you? It’s the only explanation for your egregious waffle.
Sorry to be harsh. I like your blog. But this kind of elementary error is just unacceptable in someone who claims to know what he’s talking about. Go away and do a quick GCSE in Economics!
According to the CIA Fact-Book, which must be utterly reliable, no?), the UK ranks 19th in the GDP per capita league table, but since the 18 above us include five non-serious countries (small islands or collections of islands) and Hong Kong (which is part of China), it’s arguable that we’re really 13th.
France is 23rd, with GDP per capita under $1,000 behind ours ($29,600 compared with $28,700). Gibraltar is at 28 and Spain at 39, which must be irksome for our Spanish chums.
Apologies if this has already been posted in earlier comments: I havenm’t had time to check them all.
Brian
http://www.barder.com/brian/
http://ephems.blogspot.com
As I understand it, we have a veto on any change to the rebate, which is worth about £3 billion. Unless the rest of the EU put something on the table worth about, say … £3 billion, it would be madness to agree. If you feel the UK is being greedy, then there is nothing to stop the UK putting it in the foreign aid budget and giving it to countries that are considerably more deserving than EU members (even the poorer ones). We could even donate it to the EU – on a discretionary basis, rather than locking ourselves into doing it in perpetuity.
Admittedly it does depend on how you view the treaty. I see it as a business deal, not a great and noble project for which sacrifices must be made.
GDP-wise, to be honest I didn’t consider the precise rankings that vital – the only thing that mattered as far as the point I was trying to make was concerned was that Britain is richer than France and most of the rest of the EU countries. GDP was the first recognised point of wealth comparison that came to mind, so the initial check was via the individual countries’ entries on Wikipedia. It is entirely possible that I misread the things. The point that Britain is better off than most other EU countries still stands – but next time I use GDP never fear, I will ensure I take better care to get the right figures.
And equally, Nosemonkey, “The point that Britain is better off than most other EU countries still stands” and is also irrelevant.
The UK goes from paying 2.5 times as much as France to 15 times as much as France. Thus, the finances of the EU have got jack-sh*t to do with us, and everything to do with France. This is the point. On this basis it could be argued that in relative to France our rebate is too SMALL.
I simply cannot understand why we are always on the back foot as soon as the EU budget is mentioned. It is just staggering that the French can raise this issue when it is THEIR problem.
In fact, none of this is the point. The only reason that this issue has arisen now is because dear old Jacques needs to do something – anything – to distract attention from France’s “no” vote.
We – well apparently only Blair actually – seem to have fallen for the most transparent piece of subject changing for a very long time.
I think Katie, the OED would not adopt ‘period’ from American English, but instead has had it for its two centuries of existence.
In terms of GDP, now that we’ve established in terms of total GDP and GDP/person France and the UK are exactly the same (for all intents and purposes), the question of a few billion pounds is not such a major issue. £3000 million from a £1 billion economy… considering this £3000 milion represents less than 1 per cent of Government spending… our Government should make more effort to reduce waste at home and perhaps if it’s serious about this Debt thing, give the £3000 million away?
Perhaps, we should concentrate on Ireland, who despite having a GDP/person significantly higher than any other EU country (except Luxemnourg) is a net beneficiary of EU spending?
Oh btw, should we all not resort to ‘thousand millions’ and reserve billion for million millions? I have, just because this thread is anti-Americanisms too.
Chances of sense coming to the fore and sorting out the finances properly? If only.
Only way to treat this whole sordid mess is with scorn and ridicule
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Jarndyce,
“Though traditional fishing areas, now declined, of Britain (Cornwall, Devon, Grampian coast) now elect MPs from the two most strongly pro-EU parties”: fair point, but at least those parties didn’t diddle the fishermen. (I write as someone who went out on the trawlers in his last couple of summers as a schoolboy.)
Been away for a few days. Came back to the “scared cow”. Made me smile. Thanks.
Nice work chief ;-)
You have a good site, i enjoyed my stay!
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