MEPs handed EU budget ultimatum

Talks on next year's EU budget hit deadlock tonight after Europe's governments gave MEPs a "take it or leave it" ultimatum.

Talks on next year's EU budget hit deadlock tonight after Europe's governments gave MEPs a "take it or leave it" ultimatum.

During negotiations in Brussels, the European Parliament accepted it could not win a controversial 6% rise next year and would have to take the 2.9% offered by ministers.

But the deal floundered when the MEPs demanded face-saving concessions linked to long-term EU spending priorities - including swift talks on a direct tax on citizens to raise EU funds.

They were told it was 2.9% without strings or no deal at all - and left the table.

President of the European Parliament Jerzy Buzek emerged from the talks insisting that "negotiations are ongoing".

He went on: "Differences still exist between the European Parliament on one side and the Council (of ministers) on the other.

"Parliament is ready to accept the modest increase in payments in next year's budget. We are not asking for one euro more - on the condition that our political expectations are met."

The prospect of a direct EU tax has already been raised as part of separate negotiations just getting under way on long-term EU budget requirements, but ministers were not prepared to be railroaded by MEPs.

They also drew the line at the MEPs' call for a "contingency fund" to be added to the 2011 EU budget to be drawn on under certain circumstances.

The figure requested was about €3.5bn, which, added to the 2.9% increase, would take next year's budget to €134.5bn - or more or less the 6% originally being demanded.

Tonight Economic Secretary to the British Treasury Justine Greening emerged from discussions with EU finance ministers and declared: "The MEPs agreed on a 2.9% increase, but they wanted long-term concessions which are not part of the talks about the EU budget for 2011.

"This is not the time to start the discussion on EU revenue raising and an EU tax. This is about next year, and [British Prime Minister] David Cameron had the support of 13 member states to go no further than 2.9%.

"We are disappointed that this was not agreed tonight, but no deal is better than a bad deal for UK taxpayers. I hope MEPs will reflect on what is best."

Ms Greening said it was "neither sensible nor appropriate" to make long-terms discussions on spending priorities a part of the 2011 budget settlement, saying: "This is not the right place, or time and it is not necessary".

It is now up to MEPs to make the next move, but no formal meetings are planned.

Ms Greening said that if no deal is done by the end of the year, the 2010 EU budget will be "rolled over" into next year on a monthly basis until the issue is resolved.

That would effectively mean a freeze on EU spending, which is what the Prime Minister originally wanted.

Ms Greening observed: "Many governments facing budget cuts around Europe would be very happy to have their 2010 budgets rolled over into next year."

Asked if MEPs had suffered a defeat Ms Greening replied: "It doesn't have to be about winners or losers. it is about what is best for taxpayers."

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