Darling to attend EU recovery talks

UK chancellor Alastair Darling is holding economic recovery talks with his EU counterparts – just days after French President Nicolas Sarkozy publicly slammed Britain’s economic stimulus plan.

This morning’s meeting in Brussels will consider how to raise an extra £4.43bn (€5.1bn) from the EU budget to pour into measures directly boosting growth prospects and jobs.

But the UK is resisting transferring funds aimed at rural development projects to help prop up EU dairy farmers.

Mr Darling is unconvinced that the downturn justifies extending Europe’s economic bail-out for banks and the car industry to agriculture.

“It is quite hard to make the case that spending money on dairy farmers will provide a stimulus for the general economy,” said one British official.

A bigger problem is that plans to redirect EU budget savings from last year into the joint EU recovery plan have run into a legal hitch over a requirement that any EU budget “underspend” must be used up before the end of the calendar year, or reimbursed to national exchequers.

Officials says Mr Darling will not tackle his French counterpart over President Sarkozy’s television remarks in which he said that the UK’s VAT cuts had “absolutely not worked”.

The President said: “Britain is cutting taxes. That will bring them nothing. Consumption continues to decrease.”

Downing Street later said French officials had clarified that the comments were not meant as a “critique” of UK policy.

And the clash reinforced fears that efforts to establish a one-size-fits-all united European fiscal response will be thwarted by differing national views on what will work best.