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would hope that the size of their gross contributions
could be minimised during a transitional period; this
would be preferable to trying to boost inflows from the
structural funds, where they would have difficulties in
the co-financing. There would be a particular problem
as regards cereal imports and payment of the Community
levies. Mr Hannay appreciated the difficult situation
for the Portuguese. He explained the background to the
UK budget problem and our thinking as regards reaching
conscious decisions on the outturn of the budget so
that its broad impact was proportionate to the relative
size and prosperity of the individual Member States.
Such an approach would clearly be beneficial to the
Portuguese. Dr Marta agreed that the principle of
contributions proportionate to wealth was a good one.
without some automatic mechanism, the present system
could lead to an increase in the economic disparities
within the Community. Portugal could not agree to
being a net contributor.
Mr Hannay handed our copies
of the Background Brief on the Community Budget
Problem, the paper by Mr A Edwards 'Some Reflections on
the Budget of the EC' and the Chancellor of the
Exchequer's Speech of 3 June 1981 The European
Communities: An Opportunity for Progress'.
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