Merkel visits UK ahead of finance deadline

Wed, Nov 7, 2012, 00:00

When German chancellor Angela Merkel arrives in London for dinner this evening, she will have a chance to test the old German maxim that money matters end friendships.

EU leaders have until November 23rd to agree the framework for the bloc’s finances until the decade’s end, but leaders remain far apart on how the 2014-2020 finance plan should look.

Several member states, led by Germany, want the European Commission to accept a 1 per cent budget increase rather than the 6 per cent the Brussels body is seeking.

The so-called “like-minded group” sees this as a suitable way for the commission to make do with less money in a time of pressed public finances around Europe.

Already tense budget talks have been overshadowed by last week’s cross-party rebellion in London’s houses of parliament. Parliamentary rebels passed a non-binding but symbolic motion calling for a cut in European spending in real terms and have threatened to vote against Mr Cameron again if he emerges from budget talks in Brussels with anything less. Mr Cameron has said a spending freeze is the best outcome Britain can hope for. Dr Merkel dismissed the vote, saying it was “normal for positions to be staked out before negotiations”.

“I don’t want further vetos thrown into the room. That won’t get us anywhere near a solution,” said the chancellor, who will address the European Parliament before heading to London. In public, German officials insist that the British and German budget positions are not far apart. Both capitals have dismissed as economically unreasonable European Commission ambitions for a 6 per cent budget increase to almost 1.1 trillion until 2020.

German officials have warned their British counterparts in private that they will cancel the Brussels budget summit if Mr Cameron plans to block agreement.

Last week the Cypriot presidency proposed cutting €50 billion from the €1.033 billion spending plan over seven years. It was dismissed as too deep a cut by the commission and too shallow by many capitals.