Bundesbank wants EU bill reduced

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The Independent Online
THE BUNDESBANK yesterday called for lower German payments to the European Union, arguing that the current high net level of contributions was no longer justified since unification.

Concern about the overall burden on public finances in Germany is reflected in the Bundesbank's uncharacteristically forthright attack. It suggests a determination to reopen the issue of the sharing of EU budgetary payments - last inflamed during Margaret Thatcher's negotiation of a rebate.

Germany has slipped to sixth in the EU prosperity table as a result of incorporating the much poorer former East Germany, but the country is still by far the largest payer into EU coffers, ahead of France and Britain.

'This position was justified up to German unification when West Germany lay in second place behind Luxembourg in terms of living standards in EC countries,' the Bundesbank said in its November monthly report.

It said that Germany's net contributions to the EU have risen strongly from DM10.5bn ( pounds 4.2bn) in 1987 to DM22bn last year. The European subsidies to eastern Germany since unification have had little compensating impact on this increase which, the bank warned, is set to continue in coming years.

By 1997, the central bank estimates, Germany's net contribution to the EU will amount to DM30bn. At an annual rate of growth of 8 per cent, this is well above the limit set by the Bonn government in its attempt to curb the expansion of German public spending.

'The financial discipline written into the Maastricht treaty on monetary union must not be undermined at the EU level by uncontrolled budgetary expansion,' the bank warned. 'The development of a central European budget at the heart of a Union financial system must also obey the rules of a restrictive financial policy.'