Cameron to Meet Merkel to Thrash Out EU Budget Differences

U.K. Prime Minister David Cameron hosts German Chancellor Angela Merkel in London today, seeking to narrow differences over the European Union budget before a summit in two weeks.

Cameron will have a working dinner with the German leader upon his return from a three-day trade visit to the Middle East. The premier goes into discussions ahead of the Nov. 22-23 Brussels summit “looking to get a deal,” though it “has to be the right deal for the U.K.,” his spokesman, Steve Field, told reporters in London yesterday. Cameron has vowed to veto an accord if it’s unacceptable.

The European Commission has proposed a spending package of 1.03 trillion euros ($1.32 trillion) for the years 2014 through 2020, an increase of almost 6 percent from the 2007-2013 budget. Cameron has said the proposal is excessive at a time of national fiscal constraints.

“One of the things that’s so notable about the commission proposal is, not only are they proposing a completely ludicrous 100 billion-euro increase in the European budget, but they are also not proposing to make any cuts to the central administrative costs,” Cameron told reporters in the United Arab Emirates yesterday.

The prime minister suffered a defeat in the House of Commons on Oct. 31, when 53 of his Conservative Party lawmakers voted to demand he negotiate a real-terms EU budget cut instead of his current negotiating position of an inflation-only increase.

German Position

Merkel has called for the budget to equal 1 percent of the EU economy, which would result in an above-inflation increase. Germany sees extended wrangling as a distraction from the main EU priority of ending the euro-region debt crisis and spurring economic growth.

“I’ve always wanted at best a cut, at worst a freeze; I’ll be in there fighting for Europe’s taxpayers, particularly British taxpayers,” Cameron said. “We will be taking a very tough approach. I look forward to my conversation with Angela. We’ve always had good, frank, open conversations and I will be making that argument with vigor.”

The issue of Europe has dogged Cameron throughout his two-year premiership, as it did his Conservative predecessors. Splits over Europe contributed to the fall of Margaret Thatcher in 1990 and hobbled her successor, John Major. Some Tory lawmakers want to withdraw from the 27-nation bloc altogether.

In a further blow to Cameron, Deputy Prime Minister Nick Clegg said Nov. 1 he will block plans to repatriate powers from Brussels unless he is “100 percent satisfied” the U.K. can opt back in to the measures it needs.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE