4:19PM EDT October 31. 2012 - LONDON — Disputes over the spending and lending policies of the European Union bubbled over into a revolt against the British prime minister by his own party and a massive strike announced for next week in Greece.
The political unrest comes as the European Union announced that unemployment had hit the highest rate recorded since the creation of the euro currency in 1996.
"Britain and Germany are looking at the same situation in the crisis and coming to opposite conclusions," said Almut Moeller, an analyst specializing on European issues at the German Council on Foreign Relations in Berlin.
Prime Minister David Cameron faced mutiny Wednesday from members of his own party, who demanded he reduce the country's contribution to the EU. Cameron has said he will not support an increase in the EU budget above the rate of inflation.
The European Commission, the administrative arm of the EU, has proposed a budget of $1.3 trillion from 2014 to 2020, an increase of slightly over 1%.
"At a time when he is cutting the education budget by 11%, the transport budget by 15%, and the police budget by 20%, how can we even be giving up on a cut to the EU budget before negotiations have even begun," Ed Miliband, leader of the opposition Labor Party, asked parliament Wednesday.
Cameron was defeated as members of his party joined those in the opposition Labor party to pass a vote demanding the prime minister negotiate cuts to the EU budget.
Britain, like other countries in the European Union, has faced austerity measures as the government attempts to get public spending under control. But while politicians argue that such cuts are necessary, some say that cuts at home mean that any increase in spending at an EU level would be inappropriate.
"It's in Britain's interests to compromise but it is awkward politically for the government, as it is with many governments having to cut spending at home but being called to increase spending in Europe," said Simon Tilford, chief economist at the Center for European Reform.
"But Cameron is not in a position to go along with that (compromise). If he loses the vote it will be very hard to see how he can sign off on any increase in EU spending," Tilford said.
The Conservatives are also agitating for less integration with the rest of Europe to avoid being ensnared into more responsibility for the debt crises of countries such as Greece, Spain and Portugal. Germany has been pushing for greater financial unity among EU members so countries that are bailing out debtor nations have more say about how those nations handle their budgets.
"The German answer is essentially a more Europe answer and the British answer is a less Europe answer," Moeller said. "That is to a great extent motivated by the conservative pressure in Cameron's party but also I think it's part of a wider feeling (in the U.K.) that this economic and monetary union that is coming about – we didn't join that and we don't want it."
England is not among the 17 EU members that have replaced their currencies for the euro.
Meanwhile in Greece, the journalists' union called a 24-hour strike and the country's two biggest labor unions said they will hold a rally next Wednesday in protest against new austerity cuts aimed at qualifying the country for further EU bailout money. And parties in parliament are rebelling against the government as well.
Greece delayed a vote on new austerity measures until next week because the country's three main parties disagree over the $17 billion in cuts demanded by the European agencies overseeing the bailout terms.
"What's new is not so much the strikes themselves but the dynamics within the coalition government which are quote worrying," said Roman Gerodimos, a lecturer in global current affairs at Bournemouth University in the U.K.
"We have seen the return of political gains and brinkmanship -- this discussion has really got stuck over the last month or so, so there is really a feeling of impending doom," he said.
Greece's conservative Prime Minister Antonis Samaras warned of financial chaos if his coalition partner, the Democratic Left party, doesn't agree to the measures. Leftists oppose changes in labor laws included in the austerity package that are supposed to help the economy grow.
Unemployment in the 17 countries that use the euro rose to a record 11.6% in September from 11.5% in August, according to Eurostat, the EU statistical agency. Spain and Greece rank the highest with official unemployment rates of 25% -- it's double that for citizens under the age of 30.
"The problem is not whether we have this measure or that measure," said Samaras. "On the contrary, the problem is what we would do if no agreement is reached and (Greece) is led into chaos."
Russell reported from Berlin.
Source: http://www.news.theusalinks.com/2012/10/31/eu-spending-policies-create-dissent-in-u-k/
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