LONDON – Is £1.7 billion ($2.7 billion) a lot of money for the British government to fork out? It is when it is a European Union budget demand that comes out of the blue. But the impact of the EU’s unexpected budget invoice is not just financial, for it has arrived at a time when the anti-EU, United Kingdom Independence Party (UKIP) is riding high in opinion polls. The episode reveals the arbitrary nature of EU budget setting, which puts the EU itself in a bad light – and could be the last straw for Britain’s EU membership.
The bill originates from a statistical recalculation by Eurostat, the EU statistical office, of the UK’s economic performance over the past 20 years. The longer-terms costs, however, could be much greater than the relatively small amount (0.1% of GDP) involved. The political crisis – which originated with the calculation of national budget surcharges and rebates from the EU budget – stems from an institutional arbitrariness that seems unjust and fosters immense resentment. Like friendships or marriages that break down over seemingly trivial issues that in fact signify fundamental problems, this budget crisis has highlighted a serious flaw in the UK-EU relationship.
The new financial demand surprised UK Prime Minister David Cameron, who called it “completely unacceptable.” For many Euroskeptics, this was yet another sign of a conspiracy by the European Commission against Britain. Referring to a children’s murder-detective board game, Cameron declared: “You don’t need a Cluedo set to know that someone has been clubbed with the lead piping in the library.” A better comparison might have been with the “Chance” cards in Monopoly, the Great Depression-era board game that highlighted the random injustice of capitalism.
The timing of the spat could not be better for Britain’s EU opponents. UKIP could conceivably hold the balance of power following next May’s general election, and force the government to hold its promised “in-out” referendum on EU membership. Under electoral pressure, Britain’s two main parties – Conservatives and Labour – are already advocating limits on immigration that are incompatible with EU law and the core principles of European integration. The emotional escalation may lead many people, on both sides of the English Channel, to conclude that the UK and the EU would each be better off without the other.