Merkel’s comments came amid a growing dispute over the controversial EU budget, with British Prime Minister David Cameron describing plans to expand the EU budget by €100 billion ($128 billion) as “completely ludicrous.”
Speaking to reporters before meeting with Merkel, Cameron said that debt-ridden European nations struggling to recover from the global financial downturn could ill afford to pour more money into Brussels' coffers.
“I believe it would be wrong for the European budget to increase at a time when we are having to make difficult decisions not just in Britain but all over the European Union to get our budgets back to balancing. That's why I've said it should be at best a cut (in the EU budget), at worst a freeze,” he said.
The Prime Minister had earlier raised the implicit threat that it could veto any increase in the EU’s 2014 – 2020 budget. He told reporters:
Germany has hinted it is sympathetic to the UK argument for austerity, but says some increase in the long-term budget is necessary.
Lobbying one of the European Union's most reluctant members to back a program of closer integration, Merkel said:
The UK is currently world's sixth largest economy and depends on the EU for half its trade.
The European Commission has proposed a €1.025 trillion budget ceiling, equivalent to 8 percent of EU GDP – a 5 percent increase compared with the 2007-2013 budget.
If there is no compromise, the default position is that the 2013 budget will be rolled over to future years, with a 2 percent adjustment for inflation added – a move London would not have any power to reject.