ANALYSIS | European member states are drafting their game plan for the upcoming negotiations on the EU’s next long term budget (2014-2020), a.k.a. the Multiannual Financial Framework. While some member countries are on a severe fiscal diet, other – richer – states hope to get a cutdown in their future payments.

(photo by Images_of_Money)

In July, the EU Commission presented a draft of the next budget that aims to increase the overall expenditure for the EU slightly. The overall ceiling is proposed to be raised to €1,033 bn for the following seven years, compared to a current budget of  €975bn for 2007-2013.

But that proposal by the European Commission will most likely face a haircut as at least Germany, the UK and Sweden are expected to demand cut downs and belt-tightening.

Denmark also starts negotiations with a specific aim: Copenhagen wants some reimbursement on their EU contributions. The country is hoping to negotiate a national rebate in its payments to the common budget, arguing that its payments are of the highest per capita in the union and that its rich neighboring countries pay too little. The Danes hope to get a five per cent cut in the payments to the union, which amounted to about 2.6 bn euro in 2011.

“When Denmark asks for a discount of one billion crowns [annually], it is to ensure equal treatment. Today, a Dane pays four euros each time an EU citizen from a country around us pays three euros. It is totally unacceptable,” said Nicolai Wammen, the Danish Minister for European Affairs, to the newspaper Berlingske Tidende.

Mr Wammen points to the rebates on EU contributions that Germany, Sweden, the Netherlands, Austria and not least the UK get. Britain has the most famous rebate on the EU payments, which was negotiated during Margaret Thatcher’s time as prime minister.

“We are not asking the Community or anyone else for money,”  said Thatcher at a summit in Fontainebleau, France in 1984. “We are simply asking to have our own money back”.

It was the first reimbursement scheme in the EU. And it is also by far the biggest. In 2010 the UK got some €4bn back. They are entitled to an reimbursement of 66 per cent of the difference between what they pay in and what they get out of the EU budget, explains the European Commission on the website.

The other EU members pay for this rebate scheme, but some have negotiated a “rebate on the rebate” which means that they only pay a part of the agreed UK rebate. But bational demands for rebates might risk shaking the European unity in times where other members struggle to decrease sovereign debt. Every time a

member country negotiates a rebate, the burden is shared among the remaining members, argues rebate-critics.

Recently, Danish MEP Jens Rohde, member of the Liberal group ALDE in the European Parliament, announced that he thought Denmark should scrap the rebate plans for solidarity reasons.

Germany, the UK and Sweden will want to tighten the belt. Denmark pushes for a rebate

The Multiannual Financial Framework (MFF)  sets the framework for EU’s budget for the next seven-year-period of 2014-2020, but a lot of negotiations have to take place beforehand. Up next is a meeting in Cyorus on 30 August where Ministers and Secretaries of State responsible for European Affairs will discuss the budget proposal, including the disputed rebates.

From October on, parties will have a few months to overcome differences before a final European Council meeting between heads of governments on 13-14 December.

That is the last summit before the agreements are being put into legislation – with or without new reimbursements to EU members.