Cameron Budget Blues Raise EU-Exit Specter as UKIP Cheer

Britain joined the European Union grousing about the bloc’s budget and threatens to go out the same way, after Prime Minister David Cameron got himself into another Brussels bustup.

Cameron upstaged a European summit as he objected to a 2.1 billion-euro ($2.7 billion) addition to Britain’s bill due on Dec. 1 -- carrying on a tradition of British petulance about European spending that peaked with Margaret Thatcher demanding, and getting, her money back in the 1980s.

This time, more is at stake than pounds and pence: the unexpected invoice from EU headquarters gives ammunition to an anti-EU movement that wants to destroy Cameron’s premiership and take Britain out of the bloc, not necessarily in that order.

“When you’re presented with a bill like this with a month to go, is that helpful for Britain’s membership of the European Union?” Cameron said today at the close of a summit of the bloc’s 28 leaders, thumping the lectern. “No it certainly is not.”

EU budget fights crop up every seven years, when the bloc sets its long-term revenue-raising and spending plans, and then fade from public view. On the last occasion, in early 2013, Cameron celebrated his role in pushing through the first outright spending reductions in European history.

The off-year budget skirmish catches Cameron at a vulnerable time, in the runup to a U.K. general election next May. The U.K. Independence Party, which wants to hustle Britain out of the EU, threatens to gain momentum in a special election for a parliamentary seat for a district southeast of London next month at his Conservative Party’s expense.

‘A Gift’

“Everything seems to be going against him,” Wyn Grant, professor of politics at Warwick University, said by phone. “The EU effort will result in reinforcing euro-skeptic sentiment in Britain. It’s a bit of a gift for UKIP.”

Cameron left Brussels to throw himself into the campaign, in the district of in Rochester & Strood. Mark Reckless, who quit the Conservatives to join UKIP, will seek in the Nov. 20 vote to become the second member of the anti-establishment party to take a seat in the House of Commons.

A UKIP victory could lead to more defections from Cameron’s party, crippling his European strategy and destabilizing his government. To damp anti-EU voices and keep the Conservatives from splintering, Cameron has staked his re-election on a promise to hold a U.K. referendum on leaving the EU by 2017.

‘Policy Nugget’

A potential defeat for Cameron’s party in Rochester would place “an enormous amount of pressure on him to pull some policy nugget out of the hat,” Tim Bale, author of “The Conservative Party: From Thatcher To Cameron,” said in an interview. “It’s difficult to know what that will be, because the lesson of the last few weeks is that there’s no magic policy bullet to answer the UKIP question.”

The EU spends about 140 billion euros annually, mostly to support public infrastructure projects and agriculture. The clash evokes the timeworn British complaint that the EU overspends, that too much money goes to French farmers, and that the pursestrings are controlled by unelected technocrats.

In this case, the EU’s statistics office, Luxembourg-based Eurostat, drew the consequences from a decision to revise economic output data back to 1995 to better capture spending on research, defense and pensions -- and even shadowy businesses like prostitution.

Economic Slant ~

At a stroke, EU-wide output was 3.5 percent higher in 2013 than it would have been under the old method. Britain was better off by 6.2 percent, making it the fourth-biggest gainer among the 28 EU countries. The downside is that the stronger a country’s economy, the more it pays into the EU pot.

European Commission President Jose Barroso said the budget reallocation was done independently and “we have been careful not to politicize the process.” He said that while the U.K. has to pay in more this year, it got a reduction in 2008.

The statistical revision reshuffled the EU’s rich-poor divisions. Germany and France will get money back from the central budget while Greece -- the epicenter of the euro debt crisis, suffering 27 percent unemployment as of June -- will be forced to pay more in.

Inside the summit, no leader questioned the methodology of the independent statistics office, according to an official who was present. The hand-wringing was over the timing of the budget revision and the image it projects of the bloc in the aftermath of the crisis.

Not Paying

Chancellor Angela Merkel said the amendments were “normal adjustment procedures” and leaders had agreed to ask finance ministers to “figure out how to solve this.” Cameron “hasn’t said that he won’t pay at all, but complained about the tight deadline,” she said.

Cameron was joined by leaders of the Netherlands, Italy, Greece and Malta in pushing for a special meeting of finance ministers next month to examine the budget question, the official said. French President Francois Hollande, who has chafed at EU constraints on France’s national budget, welcomed the EU revision as “good news” since France comes out ahead.

“This is the mechanism, it is what member states agreed,” said Jorge Nunez, a researcher at the Centre for European Policy Studies in Brussels. “It’s relatively understandable but the timing couldn’t be worse.”

A refusal to cough up may be best Cameron’s strategy, according to Grant of Warwick University.

“If he manages to tear up the bill, things are still salvageable,” he said.

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