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David Cameron: UK won't pay £1.7bn to EU budget

Britain will not pay "anything like" the £1.7 billion which is being demanded by the European Commission in additional contributions to the EU budget, Prime Minister David Cameron has told MPs.

But the Prime Minister was accused of being "asleep at the wheel" by Labour leader Ed Miliband, who said Mr Cameron should have been aware for at least two years that changes to Britain's contribution to the EU budget were in the offing.

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Inclusion of sex and drugs results in extra EU charge

The EU surcharge - which would add almost a fifth to the UK's annual contribution of £8.6 billion - is intended to reflect Britain's better-than-expected economic performance relative to other EU states.

It results from an EU recalculation of national incomes dating back to 1995 and taking into account recent changes in the rules to include economic activities such as prostitution and illegal drugs.

The inclusion of black market activities such as prostitution in EU calculations has resulted in an extra bill for Britain. Credit: DPA

It is understood that British officials did not learn about the demand until last week.

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