Hamish McRae: Britain's rebate isn't such a big deal

Making the EU more competitive is hugely important and should be the main policy goal

Published: 23 November 2005

Here is the trade. Britain gives up part of its rebate on payments to the European Union in exchange for radical reform of the project that eats up more than half of the EU's spending, the subsidies to farmers under the CAP. That, put crudely, is the proposition that may or more likely may not be negotiated before the UK presidency of the EU expires at the end of the year.

Here is the rationale. The UK rebate is an anomaly, born of the fact that Britain does not get much back from the EU, largely because we have quite a small farming sector, and the payments into it were intolerably large. Margaret Thatcher declared that she wanted her money back and won the day. But that was the early 1980s, when British GDP per head was one of the lowest in the EU; now it is one of the highest - particularly if you look at a slightly different measure of national wealth, GNI. That stands for gross national income, and includes net payments from overseas assets, on which the UK makes a large profit. In addition there are new demands on the EU from its much poorer new members.

Article Length: 1139 words (approx.)