UK baulks at prospect of interest charges on contested EU bill
By William James
LONDON (Reuters) - Britain on Tuesday said it would be "wrong" for the European Union to levy late payment charges against it over a hotly-disputed 2.1 billion-euro (1.6 billion pounds) EU budget bill that British Prime Minister David Cameron has refused to pay in its current form.
The row over the bill has heaped pressure on Cameron domestically, where he is already battling the growing popularity of the anti-EU UK Independence Party ahead of a 2015 election and struggling to control rebellious Eurosceptic MPs in his own party.
The surcharge followed a statistical review of national incomes that showed Britain's economy had performed better that previously thought, and was therefore obliged under existing rules to make an extra contribution to the EU budget.
On Monday the European Commission confirmed that if Britain missed the Dec. 1 deadline the bill would be subject to escalating interest charges, starting at 2 percentage points above the Bank of England's 0.5 percent base rate and rising by 0.25 percentage points per month.
David Gauke, the British minister with responsibility for the EU budget, on Tuesday said that the deadline for payment was not "fair or reasonable" and that Britain should not be punished for wanting extra time to scrutinise the details of the charge.
"We do believe that it would be wrong for a member state to find themselves being levied with significant interest payments as the current regulations suggest," he told a committee of MPs scrutinising the EU surcharge.
STRAINED RELATIONS
EU officials argued the revision, which also resulted in Italy, the Netherlands and even Greece being asked to pay much more for their share of EU costs, was part of an annual statistical exercise handled by civil servants, not politicians.
The dispute has added to the increasingly strained relationship between Britain and the EU ahead of a possible referendum on Britain's membership in 2017 if Cameron wins next year's election.
Cameron has ruffled feathers in Europe with a failed effort to block the appointment of Jean-Claude Juncker as head of the European Commission, and more recently with ideas on reforming the bloc's freedom of movement rules.
Domestically, he has staked significant political capital on striking a better deal for Britain on the surcharge, defiantly telling parliament last week that he would not pay "anything like" the 2.1 billion euros demanded, and that he would not meet the Dec. 1 deadline.
Chancellor George Osborne will meet with counterparts from EU member states in Brussels on Friday to try and negotiate a settlement.
Gauke said Britain would go into the talks with a "flexible" attitude but that Osborne's overriding aim was to protect British taxpayers.
(Additional reporting by Robin Emmott in Brussels; Editing by Sonya Hepinstall)
