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Business

UK PM Cameron balks at EU payment demand

A European Union summit has been interrupted by a demonstratively angry British Prime Minister David Cameron, who rejected a "sudden" request that London pay billions more into the bloc's budget.

British Prime Minister David Cameron on Friday vehemently dismissed a request from the European Union for an additional 2.1-billion-euro payment into the bloc's coffers after a revision of official data showed the United Kingdom's economy was doing well.

"We are not suddenly going to get our checkbook and write a check for 2 billion euros. It's not going to happen," Cameron said on the second day of an EU summit in Brussels, adding that the surcharge was an unfair way to treat one of the bloc's biggest contributors

"I'm not against readjustments … but this is completely unacceptable," he said.

The charge stemmed from a revision of updated figures for Britain's gross national income. EU members pay into the bloc's budget according to the strength of their respective economies. In the past, when the UK economy was shrinking, London received money back. Now that its economy is recovering, its contribution has been adjusted upwards.

An EU official called the revision a "technical matter" and said it came up every year.

Fuel to the fire

But the request for more money comes at an inopportune time for Prime Minister Cameron, who faces staunch resistance at home to the 28-member bloc by euroskeptic political parties.

"The EU is like a thirsty vampire feasting on UK taxpayers' blood," said Nigel Farage, head of the UK Independence Party, which opposes Britain's EU membership.

European Commission President Jose Manuel Barroso, in response to Cameron's objections, said rules were rules and they should not be questioned. He noted that EU member states had voted in favor of the budget scheme.

The British prime minister shot back that Barroso "had no idea of the impact" of the surcharge. Cameron has promised to put his country's EU membership to a referendum by late 2017 if he wins an election in May.

Bone of contention

Eager to defuse the situation, EU leaders agreed to hold an emergency meeting between finance ministers and the European Commission in the coming weeks.

Other countries, including the Netherlands, Finland and even bailed-out Ireland and Greece, which has been in recession for six straight years, were also asked to pony up additional funds into the EU budget.

Another source of contention was the fact that France and Germany, the eurozone's most powerful and prosperous economies, will both receive rebates from the EU as their economies falter.

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The row over extra budget payments overshadowed the summit's original agenda, aimed at finding ways to prevent the eurozone from slipping into recession.

Also at the summit, European Central Bank (ECB) President Mario Draghi called on eurozone leaders to work together to tackle structural reforms, respect budget discipline and stimulate investment and demand.

"In 2011-12, we avoided the collapse of the euro in a joint effort," Draghi said, according to a spokesman who was reading from the ECB chief's talking points. "Now our focus shoudl be again to act jointly on avoiding a relapse into recession."

nz/cjc (dpa, Reuters, AP, AFP)

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