EU Says U.K. Faces Rising Penalties in Surcharge Dispute

The U.K. will face increasing European Union penalty payments the longer Prime Minister David Cameron ignores a 2.1 billion-euro ($2.5 billion) bill, the European Commission said.

The EU will demand an annual interest payment of 2.5 percent if Britain does not pay the surcharge before the bloc’s Dec. 1 deadline, Jakub Adamowicz, budget spokesman for the Brussels-based commission, said today by e-mail. This will rise by 0.25 percentage point every month of non-payment, he said.

“If payment is not made by Dec. 1, there is a process of interest paying,” commission spokesman Margaritis Schinas told reporters in Brussels today. “Each member state has to pay what is due and this automatically impacts on the budgetary contributions of all the other member states.”

Cameron, fighting off challenges from both the anti-EU U.K. Independence Party and rank-and-file lawmakers in his own Conservative Party over Britain’s relationship with the bloc, has said he will refuse to pay the bill, arising from a recalibration of payment obligations based on economic performance, by the due date.

The demand for an additional contribution to the EU budget with such a tight deadline “is an appalling way to behave,” Cameron told reporters at the end of an EU summit on Oct. 24.

Cameron “rejects the scale and timetable for this payment,” his spokeswoman, Helen Bower, told reporters in London today. U.K. Chancellor of the Exchequer George Osborne will plead the British case before a meeting of his 27 EU counterparts at a scheduled meeting in Brussels on Nov. 7.

‘Working Hard’

“We are all working hard” to find a solution, Italian Ambassador to the EU Stefano Sannino, whose country holds the rotating presidency of the bloc, told reporters today in Brussels. Negotiators are treading a “narrow path” between respecting EU law and dealing with an “unprecedented” problem, he said. Italy faces a surcharge of 340 million euros.

Any attempt to stretch the payment period beyond Dec. 1 would require fast-track legislation supported by a weighted majority of EU governments, Jacek Dominik, who stepped down as the EU’s budget commissioner on Oct. 31, said last week. He also said seeking to extend the payment deadline could backfire on Britain by bringing into question a longstanding refund that the U.K. receives from the EU budget.

The EU has demanded smaller top-ups from other countries as part of the process. The Netherlands, a traditional British ally on budget matters, has signaled it is prepared to pay the extra 643 million euros that it has been asked for.

A YouGov poll published yesterday found 52 percent of respondents saying the U.K. should refuse to pay the surcharge if Cameron can’t persuade the EU to drop the demand. Only 11 percent said it was fair for Britain to contribute more. YouGov questioned 1,808 British adults on Oct. 30-31. It didn’t specify a margin of error.

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