Danish prime minister Helle Thorning-Schmidt has said she will block talks on the 2014-2020 EU budget unless she is offered a rebate of 1 billion Danish crowns (€134 million).
The Danish government has already included the anticipated rebate in its tax reform plans for 2013, and the package would lack coherence without it, she said.
"We are going to get our rebate, and if we don't get our rebate, then we will have to use the veto. It's very, very simple," the prime minister told the Danish parliamentary committee on European affairs Thursday (25 October), according to the news agency Ritzau.
Denmark is one of the biggest net contributors to the EU budget, in proportion to the country's relative small size.
In 2011, it gave €2.12 billion to the EU's coffers, collecting €437 million in customs and farm trade duties on the EU's behalf, of which it retained 25% as an administrative fee, according to EU figures on country contributions.
Other EU member states with big net contributions such as Britain, Germany, Sweden, The Netherlands and Austria already get rebates in the form of lump-sum payments or reduced VAT call rates (>> Read European Commission summary of national compensation mechanisms).
In practice, Copenhagen argues that it funds such reimbursements.
Rare EU veto
The Cypriot presidency is now finishing a draft proposal for the 2014-2020 budget, in close cooperation with the president of the European Council, Herman van Rompuy. Nicosia has noted the noises coming from Denmark.
"We are taking these statements from the membership countries into account. No doubt about it," the spokesperson Nikos Christodoulides said.
Every EU member state must agree on the seven-year budget, and if Denmark blocks talks, it cannot be adopted. The veto is thus a consequential tool for a member state to use.
British Prime Minister David Cameron has also warned that he could veto the EU budget for 2014-2020 “if necessary”, and that measures would be taken to make sure that immigrants from EU countries would not take the jobs of fellow Britons.
Whether Denmark will get a rebate or not, the spokesperson declined to say.
"No one knows at the present time," Christodoulides said.
Support from Danish parliament
The Danish prime minister's statements were immediately backed by other parties in the Danish Parliament.
"This is totally new and really positive," said Nicolaj Villumsen, rapporteur on EU affairs for the EU-critical party the Red-Green Alliance.
The Liberal Alliance party's EU rapporteur, Merete Riisager, also welcomed Thorning-Schmidt's comments.
"It's about time Denmark put its foot down. It is insane that countries have to make cuts while the EU keeps spending," Riisager said. "It would delight me if we finally have a prime minister who can say no to the EU."
The leader of the eurosceptic Danish People's Party, Kristian Thulesen Dahl, was also pleased by the news.
"I think it's absolutely incredible if Thorning-Schmidt through this message would guarantee that we get this in every way reasonable rebate," he told the newspaper Politiken.
The Liberal's EU rapporteur, Lykke Friis, warned the prime minister's message could affect Denmark's influence on budget discussions, and complicate the country's diplomatic situation.
"She's playing a risky game," Friis added.
>> Read EurActiv's LinksDossier: EU budget 2014-2020: The €1 trillion deal
At roughly €130 billion a year, the EU's annual budget is equivalent to around 1% of EU national wealth, or €244 per EU citizen.
The European Commission proposes raising it to €146 billion over the next seven-year period (2014-2020), or €1.025 trillion in total.
The EU budget covers all of the Union’s activities, and only complements national budgets. Up to 80% of it is spent by EU states' national or regional governments, which are responsible for selecting beneficiaries and ensuring the money is spent correctly. While critics claim that most of the budget is spent on administration, in reality these costs usually amount to less than 6% of the total.
With the enlargement of the Union, the budget has grown - a trend set to continue as Croatia prepares for EU entry in 2013. But in the context of the eurozone crisis, while most member states adopt austerity measures at the national level, several governments, led by Britain, believe that the EU budget should be slimmed down too.
The European Commission, many MEPs, and most new member states have taken the opposite view and argued that money spent at EU level has a higher added value and contributes towards combating the financial crisis.
The EU institutions now have to decide on the budget for 2014-2020. In EU jargon, this is called the multi-annual financial framework (MFF). They have set themselves the goal of reaching a compromise before the end of 2012.
- 22-23 Nov.: Next EU summit in Brussels to focus on the future multi-annual budget for 2014-2020.