The spirit of Fontainebleau?

Commission proposes a new system for rebates.

The Commission has proposed a new system for rebates which, it says, reflects the spirit of the 1984 Fontainebleau agreement. It was at Fontainebleau that Margaret Thatcher, then UK prime minister, won her argument with other national leaders about getting her money back in the form of an annual rebate. 

According to the Fontainebleau agreement: “Any member states sustaining a budgetary burden which is excessive in relation to its relative prosperity may benefit from a correction at the appropriate time.”

The Commission’s argument is that over time the current rebate system – which now benefits Germany, the Netherlands, Sweden and Austria, as well as the UK – has become excessively complex and untransparent.

It proposes replacing the current system of calculations based on net contributions with an annual fixed lump-sum payment. The Commission estimates that the UK could recoup €3.6 billion a year, while Germany would get back €2.5bn, the Netherlands €1.05bn and Sweden €350 million.

Prosperity

The Commission argues that this approach would be more transparent because a clear link would be demonstrated between a country’s relative prosperity and its net contribution to financing the EU’s policies.

The UK government has already said it will seek to protect the rebate in its current form.

Although the sum proposed by the Commission is roughly in line with annual rebates under the current system, the UK fears that once it had given up the principle of the current rebate system it would be more difficult to defend the rebate altogether in future EU budget negotiations.