Blair begins battle for EU budget deal

Tony Blair begins the tough talking in Brussels today as he battles to salvage a European Union budget deal and the British presidency.

Tony Blair begins the tough talking in Brussels today as he battles to salvage a European Union budget deal and the British presidency.

The Prime Minister was given a blunt message by fellow EU leaders over dinner last night that the UK must surrender more of its annual rebate.

Now Mr Blair is expected to table his third set of proposals to end the deadlock over 2007-13 spending at the summit this morning.

The PM has signalled more money for the 10 new countries, calling on member states to show the “necessary support and solidarity”.

But that may not be enough for the so-called accession countries, which have been angered by suggestions that they should accept less in development payments to speed through a deal.

Any further erosion of the annual £2.7bn (€4bn) rebate, won by Margaret Thatcher in 1984, will provoke anger at home.

Mr Blair also faces continued opposition to his call for a cut in agricultural subsidies from French President Jacques Chirac.

It was an Anglo-French row that torpedoed the last round of negotiations back in June.

And Mr Blair’s spokesman said he would continue to push for a review of the EU budget in 2008 that left the way open for reducing Common Agricultural Policy payments.

Mr Blair began the gruelling round of negotiations by meeting French president Jacques Chirac and new German chancellor Angela Merkel privately.

He then hosted the dinner where he heard the familiar refrain of calls for the rebate to be slashed from almost every other leader.

One British official said: “President’s Chirac’s remarks over dinner were short and only referred to the rebate.”

Speaking afterwards, Mr Blair said he still intended to propose a new deal but room for manoeuvre was “very limited”.

“There has to be a basis for agreement otherwise there is no point in putting forward the proposal,” he said. “I see a basis for it yes, but whether the basis for it will recommend itself to everyone I don’t know.”

Failure to broker a deal would mark a dismal end to Mr Blair’s six month EU presidency.

The Union’s 2006 budget will be unaffected but there are fears that it could lead to paralysis that could delay further enlargement.

It would also be a personal blow to the Prime Minister, who came to power promising to restore Britain’s influence in Europe.

One UK official predicted failure to resolve the budget crisis could mean “paralysis for at least a year“.

That would deepen the continuing sense of gloom triggered by last summer’s Dutch and French referendum rejections of the EU’s constitution.

However, Foreign Secretary Jack Straw made clear in the Commons that no deal at all would be preferable to a bad deal.

The commission insists the EU needs a future budget drawing on 1.24% of member states’ money – a potential annual budget of £100bn (€146bn) a year.

Mr Blair has proposed a spending ceiling of 1.03% – generating about £80bn (€117bn) a year.

European Commission president Jose Manuel Barroso said the British offer was “wholly inadequate” and “not enough”.

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