EUABC A dictionary on words related to the EU

Abatement

: Margaret Thatcher negotiated a special rebate on EU contributions for the UK in 1984 (Photo: thesetides.com)

Every Member State pays contributions to finance the EU. In 1984 Margaret Thatcher negotiated a special rebate for the UK, which is calculated annually. The reduction is technically called the abatement, but is commonly known as the British Budget “rebate” or “refund”. The main reason for the rebate was that a high proportion of the EU budget (at that time 80%) is spent on the Common Agricultural Policy (or CAP), and UK had relatively few farms, so it got a relatively small share of farm subsidies. Moreover, the UK was then the third poorest member of the Community but was on course to become the biggest net contributor to the EU budget. The rebate in any given year is equivalent to 66% of the UK's net contribution in the previous year.

Payments to the EU are largely funded by VAT returns and are roughly proportionate to the size of the economy.

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