Blair: UK rebate will remain

Wednesday, 8 June 2005 12:00 AM

Tony Blair has pledged that the UK will not abandon its annual rebate from the EU.

The Prime Minister's comments came this lunchtime during Prime Minister's Question Time as the UK increasingly comes under pressure from EU partners.

The rebate, negotiated by Margaret Thatcher, refunds the UK two thirds of the difference between its gross contributions to the EU and the money it receives back.

Ministers argue that the rebate is still justified because the UK receives little of the EU's vast agricultural subsidies and point out that even with the rebate Britain is the EU's second largest contributor.

The rebate is worth about £3 billion a year and without it the UK would pay the EU around £5 billion a year.

But, the expansion of the EU has increased pressure on the UK to give up the rebate, which a number of other countries see as unjustified.

Mr Blair said today: "The UK rebate will remain and we will not negotiate it away, period".

But, his statement appears to leave open the possibility of the UK accepting a cap on the amount of the rebate, a compromise solution reportedly favoured by Luxembourg, which currently holds the EU presidency.

Chancellor Gordon Brown has previously hinted that the UK could use its veto to preserve the rebate.

Discussions about the rebate are parallel with the continued wrangling over the EU's budget. Whilst the European Commission wants to raise the budget to 1.24 per cent of GDP, the UK and a number of other countries want the budget capped at one per cent.

These matters will be centre stage at the upcoming Council of Ministers.

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