Britain's David Cameron in new row over EU demand for extra S$3.39b

British Prime Minister David Cameron arrives for a European Union summit at the EU headquarters in Brussels on Oct 23, 2014. -- PHOTO: AFP
British Prime Minister David Cameron arrives for a European Union summit at the EU headquarters in Brussels on Oct 23, 2014. -- PHOTO: AFP

BRUSSELS (AFP/REUTERS) - Prime Minister David Cameron faces a fresh showdown with the EU after Brussels on Thursday demanded an extra 2.1 billion euros (S$3.39 billion) from Britain because its economy is thriving while Europe stalls.

Under new budgetary calculations, deficit-laden and struggling France will be owed 1.0 billion euros, a European Commission spokesman said.

Germany, the bloc's most powerful and richest economy, meanwhile gets a rebate of 779 million euros.

The Netherlands is like Britain tapped for more funds, having to pay 300 million euros, spokesman Patrizio Fiorilli added.

The surcharge is a fresh blow for Cameron, who faces an election in May and has promised an in-out referendum on Britain's EU membership in 2017 to curb a growing threat to his Conservative party from the eurosceptic leader Nigel Farage.

The surcharge is based on a revision in the way that the economic output of EU states is calculated dating back to 1995, a figure which includes previously hidden elements such as drugs and prostitution, and the overall economic situation of each country.

"The British economy is growing much faster than the others and the logic is the same as with tax: if someone earns more, they pay more tax," Fiorilli told AFP.

"Mathematically that means 2.1 billion euros more for 2014 for Britain, more than 300 million for the Netherlands and a billion less for France."

Speaking at a summit of EU leaders in Brussels, outgoing European Commission Jose Manuel Barroso said he was not aware of the payment demanded from Britain.

"It's the first time I have heard about that. I have not been informed so I will not comment on the point," he said.

Cameron left the first day of the summit without commenting on the issue.

But a source in his office said Britain would work with the Netherlands and vowed to challenge the demand.

"It's not acceptable to just change the fees for previous years and demand them back at a moment's notice," the source said.

"The European Commission was not expecting this money and does not need this money and we will work with other countries similarly affected to do all we can to challenge this."

The British economy is recovering well from the slump after the financial crisis, growing by 3.2 per cent in the second quarter of 2014 compared to a year earlier.

In contrast, the European economy is stalling, dragged down by France and now a slowing Germany.

Britain has long defended a cherished £3.1 billion annual budget rebate won by late prime minister Margaret Thatcher in 1984.