Cameron and the EU bill: very clever or very stupid?

So the EU has presented the UK with an additional bill of £1.7 billion, and David Cameron is kicking off and saying we’re not going to pay.

My first reaction was ultra-cynical. The Conservatives are faced with the threat of another by-election against UKIP in a couple of weeks. Perhaps the whole thing had been orchestrated in cahoots with the EU as an elaborate charade. Here’s how it works in Cameron’s favour: the EU pretends to be owed £1.7bn, Cameron makes a big stand and refuses to pay, the EU backs down from its fictitious demand and Cameron struts around like he’s proved he can defeat them. Wobbly Eurosceptic voters decide he’s the real anti-EU statesman and stick with the Tories instead of haemorrhaging to UKIP.

While the intense cynicism of such a conspiracy theory is appealing, it requires us to believe that a) European Commissioners would agree to go along with such a massive piece of international financial fraud, at a significant risk of later discovery, and b) David Cameron is clever enough to come up with such a scheme. Neither assumption is very plausible.

So if the bill is real, and it’s likely we’ll have to pay it (since it’s an international treaty obligation), then the only alternative interpretation to Cameron being incredibly clever is that Cameron is being incredibly stupid. Because if we’re going to have to pay it, then kicking up such a fuss about how he’ll refuse achieves nothing, except to dynamite his own credibility.

The EU payments are like income tax. The more you earn, the more you pay; the less you earn, the less you pay. If you don’t earn as much as expected, you get a refund. But if you make more, you get a little extra bill for a portion of that. £1.7bn sounds huge, but in national terms it’s a small fraction of a much bigger economic surplus which we’ve benefited from.

Bearing that in mind, here’s how Cameron could have spun the EU’s revaluation surcharge: we’re part of a system which refunds us if we do badly, and charges us extra if we do well. And we’re doing well. Really well. In fact, thanks to the Coalition’s economic policies over the last four years, our economy is now doing better than all the EU accountants and bureaucrats expected. Yes, it means we have to pay a bit extra to the EU this year, which is annoying, because tax is always annoying (remember how we reduce taxes?) But the bigger picture is that we’ve got the biggest bill because we’ve got the best-performing economy. Could UKIP’s loons and fruitcakes have achieved that?

But that’s not the tactic Cameron’s gone for. Instead of shrugging it off as a minor nuisance and a reminder that the economy’s picking up again, he’s decided to blow it out of proportion as some kind of ideological struggle against the EU, which is the worst thing he could possibly do from a party political perspective, as it plays straight into UKIP’s narrative. And when he inevitably loses the struggle, Nigel Farage will be laughing all the way to Rochester and Strood.

So I’ve pretty much convinced myself that Cameron’s being very stupid, not very clever. The proof will be whether the UK ends up paying or not. If we do, his stupidity will be beyond doubt.

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