European leaders meeting in Berlin are expected to agree on a seven- year reorganisation of the Union's finances, aimed at preparing for enlargement to eastern Europe. The latest attack on the British rebate, won by Margaret Thatcher in 1984, has been going on since negotiations on future financing began more than a year ago. But draft conclusions for a final agreement, tabled by the German EU presidency yesterday, conceded the principle that the British rebate will remain.
Mr Blair and his EU counterparts were still haggling last night over the terms of "adjustments" to the rebate, which could reduce its value by up to pounds 450m annually.
Britain has virtually agreed to surrender gains from two forthcoming EU policy reforms: the shift in the way contributions to the budget are calculated from VAT to GNP and moves to allow countries to retain more of the customs duties they normally pass on to Brussels. These add up to nearly pounds 150m a year.
Yesterday, the Government's spokesman conceded that Mr Blair could sign up to a deal as long as it did not leave Britain worse off. He said: "If the system is changed in a way that would give us not a penny more or less that's fine. We have no problem with that."
Germany, however, was still demanding that Britain share the burden of the rebate. That could add pounds 300m to Britain's bill.Reuse content