Brussels warns the UK faces £70m-a-month interest on bill for extra £1.7bn EU officials reveal 2.5% interest charge for Britain, rising to 5.5% next year David Cameron has insisted he will not pay bill by December 1 deadline Italy, which holds rotating EU presidency, insists compromise is possible Chancellor George Osborne warns the EU is not working for Britain Britain faces paying £40million-a-month in fines if David Cameron refuses to pay the EU's surprise demand for an extra £1.7billion by December 1. Brussels officials revealed interest would be charged at 2.5 per cent for every month the UK fails to pay, rising higher still if it drags on for months. However, the Prime Minister's hopes of rebuffing the demand were boosted last night as Italy insisted there is a 'widespread willingness to find a solution to this issue'. Britain has been told to pay £1.7billion by December 1, on top of the £8billion-a-year it already pays. The European Commission issued the demand last month after using rules dating back to 1995 and finding Britain's economy has grown faster than expected, so must pay a greater share to Brussels. Bizarrely, Germany is also in line for a rebate while countries like Greece and Italy must pay more. Mr Cameron has angrily insisted he will not bow to the demands, declaring: 'I am not paying that bill on December 1. If people think I am, they have got another thing coming. It is not going to happen. However, the UK is now being warned that it will face fines for not paying, levied through increasing interest payments. European Commission spokesman Margaritis Schinas said: ' 'Each member state has to pay what is due. If payment is not made by 1 December there is a process of interest being accumulated. Britain faces an interest rate based on the base rate of the Bank of England - 0.5 per cent - plus an additional two per cent. This would be 2.5 per cent for the first month, worth an extra £42million. The interest rate would then rise by an extra by 0.25 per cent per month. By the end of 2015 it would reach 5.5 per cent, or £93.5million. Meanwhile Italy, which faces a bill of almost £270million and holds the EU's rotating presidency, has signalled it is keen to strike a deal to avoid a prolonged legal wrangle. Chancellor George Osborne said the EU was 'causing problems for us' - and warned the continent was 'pricing itself out of the world economy' An Italian government source said: 'This is not the end of the story. There is a widespread willingness to find a solution to this issue. Chancellor George Osborne will use a meeting of EU finance ministers in Brussels on Friday to lobby for changes to the bill. Downing Street says the government is still examining the detail of the rules used by EU officials to calculate the astonishing demand, linked to better than expected economy growth. Mr Osborne warned that the EU is 'not working for Britain' and warned the continent was 'pricing itself out of the world economy'. He told the BBC's Newsnight programme: 'Britain joined [the EU] for economic reasons, and when it's not working economically for Britain that's why we get this debate about the membership of the EU and the nature of that membership. 'I'm someone who wants to stay in the EU, I think that's right for Britain, but it has to be a reformed EU.' He said that the EU was 'morphing more and more into a eurozone focused on the survival of its currency'. He added: 'It's perfectly all right for the UK to say as the big country that's not in the euro, this relationship is not working properly for us.' Britain faces the biggest increase to its payments covering the last four years. The UK is being asked for an extra 2.1billion euros. Preliminary figures show that the Netherlands will have to pay an extra €642million (£506million), while Germany will receive a rebate of €779million (£614million), France €1billion (£790million) and Poland €316million (£250million). Mr Cameron has formed alliances with the Netherlands, Malta, Italy and Greece - who all face bills worth millions - in an attempt to force a change of heart.