UKIP and the EU Surcharge

WEEKLY COMMENT 23-10-2014

By Barry Edwards

UKIP and the EU Surcharge

The European Commission informed the UK government that it must pay an additional €2.1 billion surcharge on top of the net annual contribution of £8.6 billion to the EU budget. The Commission also told the Netherlands to pay an additional €642million and Italy €340million, while Germany receives a rebate of €779million as well as France €1billion and Poland €316million. All EU members are involved and these are the largest adjustments, the full list is available if you click on the link below;

http://im.ft-static.com/content/images/2d981f12-5adc-11e4-8625-00144feab7de.pdf

The reason for these surcharges and rebates is a reassessment by the EU of gross national income to include hidden elements such as prostitution and illegal drugs. Since calculating these figures is a pure guess, it is not surprising that the UK, Italy and the Netherlands will challenge the way they are calculated and the Dutch Prime Minister, Mark Rutte, has already revealed his country is considering taking legal action at the European Court of Justice.

Apparently, the EU members were told about these new calculations last week and the official announcement was made today, Thursday. Personally, I was not aware these figures were being recalculated but I am sure there was some press release a while ago saying they were carrying out this reassessment; the European Commission website is not easy to navigate.

The EU rules are straightforward concerning the amount each country contributes to the budget of the union. In effect, it is simply a percentage of VAT and Gross National product (GNP). Therefore if you adjust GNP upwards to reflect the hidden figures which the UK has done the contribution to the budget increases. Many countries have started doing this including the USA and therefore the EU has acted correctly in making the adjustments. It will be made clear how the EU officials have arrived at these figures in the next few months since the figures announced today are to be updated when further calculations are included.

The argument over the figures will, no doubt, continue for some time before any country pays up but the main effect of the announcement will certainly kill off any chance of the Conservatives winning the by election in Rochester and Strood on November the 20th. The polls were showing UKIP ahead by 13% this week, it is likely that will be enhanced as we get nearer the election unless something really drastic occurs to upset the UKIP bandwagon.

If UKIP does win convincingly, it will have a big impact on the general election next May. There are about 100 constituencies that have small enough majorities to be affected by a big swing to UKIP and that could make a big change to the outcome. All the main parties must be very concerned which should make the general election important to many people improving the turnout noticeably.

As far as the UK is concerned, the political backlash is likely to spread through all parties especially the Conservatives who are decidedly split when EU matters arise. This could make life very difficult for David Cameron and encourage further defection from his party to UKIP. It is possible that this announcement will encourage a lot of negative discussion about the EU and shift the support that has been gained recently. This week an opinion poll has shown that when people were asked how they would vote in a referendum on Europe based on the party they support, even the Conservatives showed 51% in favour of staying in the EU; the Labour and Lib Dems were much higher around 65% and 82% respectively.

The fuss this announcement has created is likely to remain in the headlines for some time and it can only encourage further support for the anti EU parties around Europe. Even though the figures are based on the submissions by each EU member and the calculations have been standard for many years also accepted by all members, it can only generate bad publicity for the EU cause and more negative reaction.

That’s all for this week, more observations next week.

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