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Thursday 1 November 2012

EU Vote – What Happens Next

Young Dave and his fellow Jolly Good Chaps were unsuccessful in their bid to keep enough Tory MPs on side last night, and so the Government was defeated on that subject that keeps all leaders of the Conservative Party awake at night, Europe. More specifically, this was at the end of a debate on future EU budgets, and more than fifty Tories voted with Mil The Younger and his pals and against the PM.

But the EU budget issue will not go away. And the idea of actually reducing that budget in absolute terms – a real terms reduction having been effectively rejected, even by Labour – is not credible, and isn’t going to happen. So how do the various factions get out of this with their credibility intact? Sure, there will have to be a little papering over of the gaps, but a look at the factoids and numbers shows you how.

And it also shows all sorts of other things about the EU: how our contributions have been declining as a percentage of GDP over the years, how the EU’s accounts have – contrary to popular myth – been given a clean bill of health by the Court of Auditors, and how payment appropriations (how much is paid out) invariably fall short of payment commitments (how much is budgeted to be paid out).

On top of all that, the EU budget, although it has risen over time, has done so more slowly than member states’ own spending, and so has fallen from around 1.2% of GDP to about 1%. So we are spending less on the EU when compared to our total Government spend. And the budget proposals are for a real terms freeze compared with the figures for 2013 – for the following seven years.

Have a think about all that. The EU deals with trade, agriculture, fisheries, all kind of trading and food standards stuff, road safety, security and policing cooperation, and of course gives us the freedom of movement, work and residence across all member states, and it costs us 1% of GDP. The benefits in market access alone probably outweigh the contribution several times over.

Yet we have outrage in Parliament over a seven year real terms freeze in that budget, and grim warnings of MPs refusing to go along with anything other than cuts. However, there is a clear way out for all those who really matter, which means the bulk of the three main parties. And that exit strategy comes down, generally, to forms of words and how they are sold to those MPs.

That freeze can be sold as a cut compared to what has gone before, and certainly when compared to many national budgets. It can also be sold as giving help to those member states that need it. And it can be sold as a predictable amount each year until 2020 – with no nasty surprises for the Treasury. All the largest factions can find sufficient comfort to get them on board when the serious debate begins.

As for those out on the fringe, well, nothing will satisfy them bar withdrawal.

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