Tony Blair appeared set to surrender more of Britain’s European Union rebate tonight in a bid to resolve the budget crisis.
The British Prime Minister is expected to increase his offer of foregoing £5.5bn (€8.1bn) over seven years in return for a review of EU spending – including farm subsidies – in 2008.
Mr Blair decided to go for a deal that will salvage the UK’s European Presidency after private talks with French President Jacques Chirac.
New German Chancellor Angela Merkel joined the two men for crucial negotiations as the PM pressed for an agreement.
French opposition to agricultural subsidy cuts and the UK’s attachment to the annual £2.7bn (€4bn) rebate, won by Margaret Thatcher in 1984, torpedoed previous talks.
The PM has come under intense pressure to surrender more of the payback from almost every other EU leader at the Brussels summit.
He did not want to make another offer unless there was an opportunity for agreement.
Officials feared that any proposed rebate cut would become the starting point of future negotiations if the summit failed.
However, Mr Blair appeared to be on the brink of a securing a fundamental review of EU spending in 2008 in return for a further cut.
British officials have been adamant that the review must allow for a cut in agricultural subsidies in the 2007-13 period under negotiation.
That has been fiercely opposed by President Chirac, who insists Common Agricultural Policy payments have been fixed until 2014.
However, speaking after the meeting with his French and German counterparts this morning, Mr Blair’s official spokesman said there had been “some progress”. President Chirac knows that the review will not reduce his sacred farm subsidies at least until 2014 and only then by unanimous agreement of all EU leaders.
After lunch with all 25 heads of government, the PM continued with one-on-one meetings through the afternoon. His fresh proposals were due to be tabled at 6pm British time.
He still faces anger from some of the 10 new members over suggestions that they should accept lower levels of development aid in return for a quick deal.
However, Mr Blair is keen to reduce the overall level of spending from the €871bn proposed by Luxembourg, the former holder of the EU Presidency.
Offering up more of the rebate will be unpopular back in Britain but failure to secure an agreement would be a personal blow for the PM.
Mr Blair, who leaves office before the next election, came to power promising to increase Britain’s influence in Europe.
British officials have also warned that failure to secure agreement at the last summit of the UK Presidency could mean 12 months of paralysis.
That would raise questions about further expansion and increase gloom in Brussels following the EU Constitution defeats in France and Netherlands.