France and Poland unite to block UK budget plan

Europe's leaders are preparing for a summit battle over finance today after Poland and France dug in against revised EU spending plans.

As the EU's 25 heads of government prepared for a two-day negotiation, Warsaw and Paris rejected proposals tabled by the UK that reversed some planned cuts in spending in Eastern Europe.

Yesterday's document was designed to mollify the 10 new countries that joined the EU last year, and who stand to suffer most from spending reductions put forward by Tony Blair.

Britain made no change in its offer to reduce the value of the UK rebate by €8bn (£5.4bn) over seven years, although it will have to concede more during the summit if a deal on EU spending for 2007-13 is to be secured.

Poland's premier, Kazimierz Marcinkiewicz, said: "Tony, stop pretending you're making steps and I advise you, you'd better make a step or better, make two or three steps. This proposal is in no way is satisfactory for Poland."

Philippe Douste-Blazy, France's Foreign Minister, described the British plan as "unacceptable", adding: "The new proposals on the British rebate are in effect identical to the previous ones which, we have underlined, cannot constitute a basis for negotiation."

When he arrives in Brussels this afternoon, Mr Blair will embark on one-to-one meetings with other EU leaders in the hope of nudging them towards a deal before the summit's formal opening dinner tonight.

British officials do not expect any immediate breakthrough, acknowledging that other EU governments will seek further concessions. But they believe agreement is still possible.

In a final attempt to clinch an agreement in Brussels, Mr Blair is expected to offer a further reduction in the rebate on Britain's EU contributions - but only if France agrees to a review of all EU spending, including the Common Agricultural Policy, which could lead to changes before 2013.

The comments from Poland will concern Mr Blair since the revised offer had been designed to bring back onside the former Communist countries and head off the possibility of Paris and Warsaw blocking the deal together.

The revised proposal would cut aid to eastern European countries by about €12bn from a plan put forward in June, rather than the €14bn cuts sought in the previous UK plan last week. The blueprint would increase overall spending by €2.5bn to €849.3 billion, or 1.03 per cent of EU output, from the 1.027 per cent in last week's proposal.

But British officials said the new member states had been offered a series of concessions worth €1.51bn in total, of which at least €1.2bn would be directed to Poland. Warsaw originally stood to lose more than €5.5bn.

The package was assembled after talks with Polish diplomats in London on Tuesday. But Mr Marcinkiewicz leads a minority government and has limited room for manoeuvre.

Mr Blair's official spokesman said: "We have to be realistic and recognise that we are posing difficult choices for people."

Downing Street admitted that under the revised proposals, Britain would pay an extra €500m to the EU, but said France would contribute €800m more, Italy an extra €700m and Germany €1m more.

While Britain's net contribution would rise by 51 per cent, France's would increase by more than 100 per cent, it said.

Jack Straw, the Foreign Secretary, told the Commons: "We are working hard for a deal this time but I am clear that no deal is preferable to a bad one."

Mr Blair faces criticism at home as well as from Britain's EU partners. William Hague, the Tories' shadow Foreign Secretary, accused him of "capitulation". He said: "Rarely in the field of European negotiation has so much been surrendered for so little."