Some thoughts on the budget that have not been highlighted in the media:

• The original British rebate was agreed over twenty years ago when Britain was one of the poorest member states and when 2/3rds of EU spending was on agriculture. It is now one of the richest member states with just over 1/3rd spent on agriculture.
• If the UK rebate was left intact without any adjustment whatsoever, it would see Britain becoming the smallest net contributor by 2013, with only Cyprus paying less. The rebate was never intended to provide us with a windfall, simply to make sure we did not pay more than our fair share.
• Britain's current offer (to adjust the rebate to the benefit of the new, poorer member states) will lead to Britain, for the first time since we joined the EU thirty years ago, paying roughly the same as France and Italy (two countries who are of equivalent size to Britain). In the past, Britain paid more than double what France paid and several times the Italian contribution (in net terms).
• A more radical adjustment of the British rebate will not take place until there is a more radical adjustment of agricultural spending. Britain made this clear from the beginning.
• The current proposals, including the adjustment of the rebate, will lead to Britain paying in an extra €8 billion over 7 years (i.e. €1.14 or £bn.0.77 per year), Britain’s fair share towards the cost of enlargement. This comes to about 2.55 % of our defence budget or just under 4 pence per person per day.
• In practice, helping these poor but high growth economies to develop will boost their demand for British exports: trade with the new member states has already increased by 400% since 1990, 10 times the rate of growth of the rest of the world!
• It is also in our interest to have increasingly stable societies in central and Eastern Europe. The high human and financial (about £4b) costs of sorting out Bosnia and Kosovo demonstrate why this investment now is good value.
• The payments to central and Eastern Europe are lower than envisaged in the Commission’s original proposal – in return, Britain has proposed speeding up procedures so that they can access their dues more speedily.
• Britain is not alone in making overall agreement difficult: Spain insists on remaining a net recipient of EU funding to a far higher degree than the much poorer eastern European countries. France refuses to countenance much more agricultural reform. The Netherlands, Sweden, Germany and Austria also want to limit the increase in their contributions through special arrangements similar to Britain’s.
• The overall level of the EU budget remains limited to just over 1% of GDP and has been coming down as a proportion over the last few years. This means that, with enlargement, we are getting “more Europe for less”. The sums involved are anyway relatively small.
• In any case, the UK rebate will rise from €5 billion to €7 billion (£4.7 billion).