October 27, 2014 / 12:10 PM / 5 years ago

EU warns row over budget payment puts British rebate at risk

BRUSSELS (Reuters) - The European Union warned Britain on Monday it would put the country’s cherished EU budget rebate at risk if it tried to change the rules in response to a surprise 2.1 billion-euro (1.65 billion pound) bill from Brussels.

Britain's Prime Minister David Cameron points at reporters as he attends a news conference after an EU summit in Brussels October 24, 2014. REUTERS/Christian Hartmann

British Prime Minister David Cameron responded angrily last week to an EU calculation, based on British statistics showing that the country was wealthier than previously thought, that London owed more money to the EU budget.

Cameron, who is under political pressure from Eurosceptics at home, said he would refuse to pay the bill by the Dec. 1 deadline set by Brussels.

EU Budget Commissioner Jacek Dominik voiced surprise at Cameron’s angry reaction.

Britain and other member governments were informed of the new budget calculations on Oct. 17 and Britain had at least two chances to lodge objections but failed to do so, he told a news conference.

Dominik said there was “no possibility” under current EU rules of giving Britain more time to pay the bill. And changing those rules would need the backing of a qualified majority of EU governments, which would be “extremely difficult” to achieve, he said.

He warned it would be risky for Britain to seek to change the current agreement over member states’ contributions to the EU budget. The same rules also cover the rebate on EU budget contributions that Britain has secured, which is controversial with some other member states.

“If you open this act for future negotiations, you open a Pandora’s box,” Dominik said.

The British rebate is 5.9 billion euros for 2014. Britain is in line to for an increase of more than 500 million euros in its rebate next year, using the same data on the British economy behind the request for an extra British payment, Dominik said.

“I think that would be extremely difficult to explain to other member states why on Monday you like this data (but) on Tuesday you don’t like it,” he said.

Britain’s rebate was created to offset the relatively lower share of cash the country got from EU agricultural and infrastructure funds compared with other countries.

The standoff between London and Brussels over the budget threatens to deepen growing Eurosceptic sentiment in Britain. Cameron has promised a British referendum on EU membership by 2017 if he wins an election next year.

If Britain fails to pay the bill by Dec. 1, the Commission will send London a letter demanding an explanation, Dominik said. If no payment is made in the “following weeks and months, there will be a moment when the Commission will start imposing late payment fines on the amounts that are due and not paid to the EU budget,” he said.

EU finance ministers had been expected to hold an emergency meeting on the issue next month. But Cameron’s spokesman said on Monday the subject would now be discussed at a long-planned EU finance ministers’ meeting on Nov. 7.

(1 British pound = 1.6097 US dollar)

Additional reporting by Andrew Osborn in London; Edditing by Larry King

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