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The original, now immortalised sentence of Neil Armstrong (’That’s one small step for man, one giant leap for mankind’) joined without delay the pantheon of the most well-known quotes after he descended from the ladders of Apollo 11 and stepped onto the lunar surface. While the alternative - use of the epoch-marking original - sentence used as title of this article appears first in the written media, it reflects adequately the continuous efforts, preparation and finally the success of British politics and diplomacy to overcome the problem of the British Budgetary Question that is widely known as BBQ or British Rebate.

The reasons behind the BBQ have been widely discussed in the international literature over the past decades. The present article intends to reveal the ever evolving characteristic of the diplomatic bargaining procedure that spanned various British governments. It had different appearance and pace with the different prime ministers but the target remained constant.

The problem of the BBQ emerged from the contradictions between the general structure of the EC and the special characteristics of the UK. In other words the BBQ embodied in the disparity between the relative wealth of Britain and the size of its net contribution to the European Community budget. The contributions consisted of three elements: the custom duties, the levies and the VAT (Value Added Tax) factor, while the receipts came largely from the EAGGF (European Agricultural Guidance and Guarantee Fund), financing the agricultural sector. The problem of the excessive British net contribution was twofold. On the one hand, its gross contribution was higher than the community average while on the other hand, its receipts from the EC budget were much less than those received by other countries. Its small agricultural sector could not benefit sufficiently from what was by far the biggest part of the EC expenditures.

These possible contradictions were obvious even before the UK’s accession. In the 1960s these British specificities contributed to underpinning De Gaulle’s veto arguments.

The Heath government decided that UK had to enter the EC first and then deal with the remaining problems as a member. The Accession Treaty gave the legal basis to renegotiate the terms of entry. The first attempt at this was in 1975 with only a specious solution. With the arrival of the ‘Iron Lady’, Mrs Thatcher the BBQ gained new impetus. The agreement of 1980 brought an interim solution but for a permanent agreement Britain had to wait another four years. However, Fontainebleau meant not only the settlement of the BBQ but also a further step in the financing of the Community.

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Small Step for Thatcher, One Giant Leap for the UK

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2010.01.24.