CBI tells Blair not to yield on EU rebate

Business leaders are worried that the Prime Minister will give up the rebate, worth £3bn a year, in order to secure a deal at next month's EU summit.

Mr Blair, who addresses the CBI conference on Tuesday, is under pressure to secure an agreement on how the European Union is financed before the UK's term as EU president runs out at the end of the year.

Mr Blair has said that the UK might be prepared to give up the rebate, first secured by Margaret Thatcher in the mid-1980s, in order to get agreement on reform of the Common Agricultural Policy.

However, France has led a battle to stop deep cuts in subsidies to farmers.

"It is better that Tony Blair comes back with no deal than a deal that does nothing for British business," said Sir Digby.

The CBI wants wholesale reform of subsidies and tariffs within Europe - something that is supported by the EU trade commissioner, Peter Mandelson.

The EU agreed a cut in sugar subsidies last week - but not as large a reduction as had been wanted by developing countries and non-governmental organisations.

Sir Digby said he was not hopeful that a deal on trade tariffs could be agreed ahead of the World Trade Organisation ministerial summit in Hong Kong in early December.

"What I fear is that what we are going to get from Hong Kong is not a lot," he said.

The CBI has started advertising for Sir Digby's replacement, with interviews likely to take place early in the new year. Although Sir Digby's contract extends to the end of 2006, he said it was "90:10" against him being at the helm of the CBI when it holds its 2006 conference next November.

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