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UPDATE 2-Merkel warns Britain against European Union exit

by on November 7, 2012 9:26 pm GMT
 

Wed Nov 7, 2012 4:26pm EST

* Merkel wants a “strong GB inside the European Union”

* German and British leaders discuss EU budget in London

* Cameron opposes “ludicrous” budget rise

By Peter Griffiths and Claire Davenport

LONDON, Nov 7 (Reuters) – Germany’s Angela Merkel on
Wednesday warned Britain not to turn its back on Europe and
urged its Prime Minister David Cameron to work with her to avoid
deadlock at European Union budget talks later this month.

The leaders met in London to try to iron out differences
over the EU’s 1 trillion euro ($1.28 trillion) budget that
threaten to block a deal and fuel fears that London is drifting
away from the 27-nation union..

Describing plans to increase the EU budget as “ludicrous”,
Cameron has threatened to veto any deal he thinks is not in
Britain’s interests and will push for a real-terms freeze.

However, German officials are exasperated by what they see
as London’s slide towards Europe’s margins, a feeling reinforced
last week after the British parliament voted to call for a
real-terms cut in the EU’s budget.

Before meeting Cameron, the German Chancellor told the
European Parliament she could not imagine a Europe without
Britain, the world’s sixth largest economy, which relies on the
EU for half its trade.

“I believe you can be very happy on an island, but being
alone in this world doesn’t make you any happier,” Merkel said
after British politician Nigel Farage, leader of the
anti-European UK Independence Party, urged her to tell Cameron
that Britain should quit the EU.

‘LUDICROUS’ INCREASE

Cameron, who wants to stay in the bloc under renegotiated
terms, argues that the EU must tighten its belt at a time when
the euro zone debt crisis looms large, and many countries are
faced with austerity and shrinking household budgets.

“They are proposing a completely ludicrous 100 billion euro
increase,” Cameron said. “I never had very high hopes for a
November agreement because you have got 27 different people
round the table with 27 different opinions.”

Cameron was humiliated by last week’s defeat in parliament
and opponents say he has lost control of Conservative Party
anti-Europeans, a group that helped topple former leaders and
that wants a referendum on Britain’s EU membership.

Debate over a referendum on Britain reworking its EU role or
even leaving has climbed the agenda. A YouGov survey in October
found 49 percent of those polled wanted to leave the EU, against
28 percent who wanted to stay in it.

Talking tough on Europe can play well with “eurosceptic”
British voters and Conservative politicians, but Cameron risks
angering EU neighbours and his pro-European coalition partners,
the Liberal Democrats.

Merkel acknowledged the need to keep domestic opinion on
side during the budget negotiations.

“We always have to do something that will stand up to public
opinion back home,” she told reporters, adding that the EU must
address areas where money is wasted. “Despite differences that
we have, it is very important for me that the UK and Germany
work together.”

Cameron’s threat to block a deal could delay a funding
increase for the poorest east European member states and isolate
Britain from disgruntled EU nations. He has already angered some
by talking of using closer euro zone integration as a chance to
repatriate some powers from Brussels.

France and Denmark have also threatened to block a budget
deal to press their own interests, highlighting the obstacle
course facing EU leaders.

Germany is the biggest net contributor to the budget while
Britain, which receives an annual rebate on its payments, is the
fourth largest net payer after France and Italy.