Denmark secures billion kroner EU rebate

PM’s demand for rebate pays off as EU leaders reach agreement on seven-year budget

UPDATE 8/2/2013, 20:19: Denmark's demand for a one billion kroner rebate on its EU contribution has been approved. 

EU leaders reached an agreement earlier this evening on a seven-year EU budget that begins in 2014. The budget will see €980 billion in total spending, which marks the first time since the EU was created that spending will decrease from the previous budget. 

The approval of Denmark's rebate demand was a huge victory for PM Helle Thorning-Schmidt (Socialdemokraterne), who was able to push it through following 26 hours of negotiations. Thorning-Schmidt repeatedly threatened to veto the budget if it did not include the rebate.

"This has required unbelievably hard work, not just from me but from everybody on the team from the government and the whole administration," Thorning-Schmidt told the Danish press corps in Brussels. "We chose a strategy, it worked and we are very happy for that."

According to Herman Van Rompuy, the president of the European Council, the budget agreement was not just good for Denmark. 

"It has been a lengthy, but successful 24 hours," Van Rompuy said. "The European Council has just agreed on the next multi-annual budget. And not just any budget. It is a balanced and growth-oriented budget for Europe for the rest of the decade."

Original story 8/2/2013, 11:30: Denmark may have secured an significant victory during the ongoing EU budget negotiations in Brussels where the latest draft budget presented this morning included a 970 million kroner (€130 million) rebate to the country’s EU contribution.

PM Helle Thorning-Schmidt has repeatedly threatened to veto the next seven-year EU budget (MFF), due to start in 2014, unless Denmark is secured the rebate.

Denmark is one of the largest per capita contributors to the EU budget, but unlike other big contributors like Austria, Britain, Germany, the Netherlands and Sweden it is not given a rebate.

“I have said it many times: It is only fair and reasonable that Denmark should no longer be paying for other countries' rebates,” Thorning-Schmidt said as she arrived at the negotiations yesterday afternoon.

After a long night of negotiations, Herman Van Rompuy, the EU president, presented a draft budget this morning that grants Denmark the rebate to its annual budget contribution.

Thorning-Schmidt has been accused of playing a high-risk gamble and risking humiliation due to her repeated threats to veto the EU budget unless Denmark is secured a rebate.

The gamble seems to have paid off, however, especially after it was revealed that Thorning-Schmidt turned down a rebate of just under €100 million offered by Van Rompuy in the week before the negotiations began.

If Van Rompuy’s latest budget cap of €960 billion, €12 billion less than his last rejected proposal in November, is approved, it will be the first time the EU budget has ever shrunk.

According to EU news website Euractiv, the two main areas of the budget to face cuts are a competitiveness fund and a ‘Connecting Europe’ transport and infrastructure fund which together lost about €38 billion of funding from Van Rompuy’s original proposal.

Other areas of the budget, such as cohesion funds, saw some modest increases while an additional €1 billion will be cut from the EU’s €62.7 billion administration costs. EU institutions will also have to reduce staff levels by five percent before 2017.

And while Denmark secures its rebate, the Netherlands and Sweden will both see their rebates halved to €650 million and €325 million respectively.

Denmark’s rebate is far from secure, as negotiations are still ongoing to secure the approval of all 27 members, after which the MFF will have to be approved by the European Parliament.