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Britain's EU input falls amid exchange-rate slide

Britain's direct contribution to the European Union fell by more than 2.71 billion pounds over 2008 compared to the previous year, according to the bloc's latest financial report issued on Tuesday.

London directly pumped 6.92 billion pounds into the 27-nation EU, down from 9.76 billion pounds for 2007 owing to a sharp decline in the value of sterling against the euro.

The size of what Brussels now calls the British correction, money returned to London to offset what it says is skewed Mediterranean agricultural spending, also increased in 2008 from 4.70 billion pounds to 5.66 billion.

Likewise, receipts from items such as border taxes and duties raised in Britain but then allocated to Europe also fell given the greater effect in Britain of exchange-rate changes during the financial and economic crisis. These amounted to another 2.26 billion.

Regardless of the impact of exchange rates, a European Commission spokesperson said the effects of the so-called 'Thatcher rebate,' the mechanism that sees all 26 other EU member states return money to Britain under a deal initially negotiated in 1984, would become diminished by 2010.

Britain nevertheless remains among 10 countries that paid in more than they got back: Austria, Cyprus, Denmark, Finland, France, Germany, Italy, the Netherlands and Sweden being the others.

The governing Labour party agreed in 2005 to sign away much of the rebate on the proviso that France and other countries would cut back on their farm subsidies.

The annual drop in the British share of contributions was set against sharp rises for France, Germany and Italy.

"It's important to stop thinking in terms of net balances," said Commissioner for Financial Programming and Budget Algirdas Semeta as he presented the figures.

"That doesn't create a good atmosphere within Europe," he said.

He said the overall British contribution to the EU's budget, between 2007 and 2013, would remain "stable at around 10 percent of the total."

He added: "The United Kingdom was and will remain the fourth-largest contributor to the EU's budget."

France was once again the EU's biggest recipient, taking in 12.41 billion pounds, but remains one of its biggest contributors with an input of 16.31 billion pounds.

The four biggest recipients were France, Spain, Germany and Italy with 47.3 percent of the EU's total budget of 106 billion pounds. The next biggest recipients were Greece, Poland and Britain.

France again topped the tables for agricultural spending, at 9.06 billion, with spending on the newer eastern European member states "set to deepen" over the next four years, said Semeta.

Poland was a major recipient of funds handed out by Brussels across the various policy categories.

The European Commission's financial report showed that a record 40 percent went on measures to boost jobs, growth and competitiveness.

However, 242 million euros of funds already committed to national projects went unclaimed by 15 member states and will now be lost.

Said Semeta: "In difficult economic times, every euro counts... that is lost money."

The commissioner said planned changes to EU budgeting mechanisms in part designed to strip away the focus on net national balances were being help up amid uncertainty as to whether the current commission's mandate will have to be extended awaiting Irish and Czech hurdles to ratifying the bloc's reforming Lisbon Treaty.