EU budget hangs in balance as negotiations continue

EUROPE’S €105 billion a year budget hung in the balance last night as EU leaders settled in for a long night of negotiations.

Taoiseach Bertie Ahern offered himself as an honest broker in the marathon round of talks aimed at securing a deal by this evening.

The summit is expected to agree to a complete overhaul of the controversial Services Directive and put a brake on future enlargements of the union.

The British, holding the EU Presidency, managed to win over most countries with small increases in funds before discussions began in earnest over dinner in Brussels.

But the deal-breaker is expected to be an agreement to review the union’s seven-year €846bn budget, possibly in 2008, a year after it kicks in.

The British are adamant the review must include the Common Agriculture Policy (CAP) while the French insist the British must give up more of their rebate and agree to phase it out.

The effects of the ongoing row were felt in Hong Kong where the World Trade Organisation negotiations were stalled as countries waited to see if the EU’s agriculture subsidies would change.

Mr Blair sounded a cautious note before he headed in to chair the summit.

“It’s going to be very tough and very difficult. It is just as well to be frank about that right from the outset. It hangs very much in the balance,” he said.

He is under huge pressure from the French and the Poles to give up more of his rebate to help fund the new poor member states.

Poland loses up to €4bn under the current proposals.

Ireland, having got back €250 million of the €450m cut from its regional funding under the latest British proposals, is adamant that there must be no change to the CAP before 2013.