EU leaders face hard budget fight

EU leaders face hard budget fight

BRUSSELS - Associated Press
EU leaders face hard budget fight

UK Prime Minister David Cameron arrives at the EU Council headquarters for a European Union leaders summit. REUTERS photo

European leaders were staking out their strong positions as they gathered yesterday for what promises to be a turbulent and lengthy summit on the seven-year budget for the 27-country European Union.

In a battle pitting several wealthy member states against those seeking a bigger aid budget, U.K. Prime Minister David Cameron led the charge for those demanding a reduction in the financial clout -and political sway- of the EU’s institutions.

As he arrived for a preliminary meeting with Herman Van Rompuy, president of the European Council of the 27 heads of state and government, Cameron said he was not happy with the latest budget proposals.

“These are very important negotiations,” Cameron said. “And clearly, at a time when we’re making difficult decisions at home over public spending, it would be quite wrong - it is quite wrong - for there to be proposals for this increased extra spending in the EU. So we’re going to be negotiating very hard for a good deal for Britain’s taxpayers and for Europe’s taxpayers, and to keep the British rebate.”

The budget primarily funds programs to spur growth in the bloc’s less developed regions and farming and amounts to about 1 percent of the EU’s gross domestic product. The European Commission, the EU’s executive arm, backs more spending, arguing that cross-border initiatives will help to create the economic growth and jobs that the bloc of a half-billion people needs.

Limits on spending

Cameron is the main proponent -alongside the Netherlands, Sweden and, to a certain extent Germany- for imposing limits on EU spending. He will demand a real cut in the EU budget, claiming that is the only justifiable outcome at a time when almost every member state has to cut its budget to lower debt.

Meanwhile, the euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November.

The flash service sector PMI fell to 45.7 this month, its worst reading since July 2009, the survey showed on Thursday. It has been rooted below the 50 mark that divides growth and contraction for 10 months now, and survey compiler Markit said it was too soon to say if this marked the nadir.

The manufacturing PMI edged up to 46.2, its best showing since March, from 45.4 in October. Similarly, the factory output and new orders indexes crept higher, but still signalled steep rates of decline.