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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

29 November 2005

UK and the EU budget

In an effort to reach a budget deal for the period 2007-2013, the United Kingdom has campaigned for a lowering of the EU overall budget. EU officials believe cuts will bring Europe’s budget down from 1.06 to 1.03 of GDP (1), though the cost-cutting will be mainly felt in Europe’s eastern and poorer regions.

In a way, Britain has a point: many countries hardly use up all the funds earmarked for them and so cutting their allowance is a sensible, if only symbolic, thing to do. But the British move seems also disingenuous: having failed to renegotiate the future of the Common Agricultural Policy (CAP), the British are turning elsewhere for their cuts. They are fighting the poorer regions because they cannot take on the richer, established powers (i.e. France).

The political dimension is interesting—is the UK trying to create an “agricultural wedge?” There is reason to think so: by cutting general regional funds, the countries who stand to lose will speak up to maintain their privileges. Tony Blair could hope that the momentum for keeping the funds in general will make them more willing to give up agricultural funds in particular. But this spells fierce domestic political battles.

The details of the UK proposal are still being worked out—but there is something interesting brewing here.

References:
“UK under fire on plan to cut aid in EU budget,” Financial Times, 29 Nov 05

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