EU must be having a laugh with your ‘prosperity surcharge’

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October 25, 2014 by Paul Goldsmith

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How kind of the EU commission to write UKIP’s party political broadcast for the Rochester & Stroud by-election. Not even in their wildest dreams could they have expected a bill for £1.7 billion to land on the Treasury’s desk for the EU’s budget that no-one was expecting. Even better, the reason we are getting this bill is because Britain’s economy has performed better than other countries in the EU. So, to get this straight, the EU have handed the UK a “prosperity surcharge” that has to be paid on December 1st. You couldn’t make that up.

The surcharge is a result of changes to how the economic growth of EU members over the past 18 years – back to 1995 – has been calculated. It is effectively, then, a retrospective bill. They are saying that they calculated wrongly in the past and now they have done the right calculations they need us to pay £1.7 billion more. France and Germany will be getting a rebate whilst the Netherlands (who have threatened legal action), Greece (how can we possibly take seriously any calculation that asks Greece to pay more?), Italy and the UK.

Last year Britain contributed £8.6 billion to the EU budget — equivalent to almost 2p on the basic rate of income tax. The recalculating of the EU budget means that Germany is about to receive a rebate of £614 million, with France getting £788 million and Poland £249 million. The individual countries’ budget contributions are routinely re-calculated, but this was about a statistical change to the way national income is calculated, and nobody saw it coming.

All this on a day when David Cameron is at an EU summit trying to coordinate a EU package of aid to be sent to Africa to help with the Ebola crisis. The UK has now contributed £125 million, which is more than 19 other EU countries combined have donated. Spain, for instance, has donated less than IKEA has, even though it is one of the nearest countries to Africa.

It all adds up to yet more of a perceived imbalance in our relationship with the EU that UKIP will no doubt jump on. I’m sure Nigel Farage will point to the way that this was done – with some ‘faceless backstage bureaucrats with their calculators smoking as they worked out how to milk the UK taxpayer dry once more’ comment. Sadly, though, he may be right about it. It will be interesting to think about what would happen if the UK refused to pay. Can it even do that? We may yet find out.

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