UK 'isolated' over EU budget proposals

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France yesterday called for the British budget rebate to be cut by €14bn (£9.5bn) as almost universal opposition to Tony Blair's plans to slash EU spending prompted the UK to promise new concessions.

At a meeting of EU foreign ministers, Britain came under fire from all sides as a powerful alliance of nations, including France, Poland and Spain, led demands for a rethink of steep cuts in aid for the EU's central and eastern European countries.

After a torrid session for the Foreign Secretary, Jack Straw, his French counterpart, Philippe Douste-Blazy, said the UK was "isolated", adding that of the 25 EU nations only the smallest, Malta, had emerged as an ally of Britain.

Poland, the biggest sufferer from the cuts put forward by the UK, which holds the rotating presidency of the EU, also made it clear that it needs significant concessions if it is to accept the package.

Though a number of EU foreign ministers dismissed the UK's plan as unacceptable and self-serving, none of its critics rejected it as a basis for negotiation. That suggests that further concessions would make a deal possible, and Mr Straw confirmed that changes will be made, probably after another meeting of finance ministers on Monday.

France was the most vocal in its opposition, saying that the UK's offer to shave €8bn from its rebate was unacceptable, arguing that only by adding a further €6bn would London come close to paying its fair share of enlargement.

M. Douste-Blazy also staked out his opposition to British plans to review all EU spending - including farm subsidies - in 2008, saying that "decisions that result from that could not take effect until after 2013". Britain is determined to achieve a mechanism that could lead to cuts in the Common Agricultural Policy before the end of the spending period which runs from 2007-13.

Mr Straw said France would gain receipts of €89bn compared with €46bn for the UK, and insisted that the review of spending must not exclude changes before 2013. He added: "The areas for an agreement are necessarily very narrow, but we are going to do anything we can to secure an agreement."

However, Britain was under fire from all sides over its proposal, which would reduce EU spending to a total of €847bn, trimming €24bn off the deal proposed in June. It represents 1.03 per cent of the bloc's gross national income.

Most of the cuts, some €14bn, would be taken in regional aid to the 10 countries that joined in 2004. But more than one third of the cut - €5.7bn - would be concentrated on Poland, creating a domestic crisis for the country's minority government.

In yesterday's meeting, the Polish Foreign Minister, Stefan Meller, described the package as "absolutely unacceptable as it stands".

That stance was supported by Spain's deputy foreign minister, Alberto Navarro, who told colleagues that the plan was fulfilling British objectives in capping spending and preserving the rebate. It was, he said, "not the proposal of an honest broker".

The European Commission is fiercely opposed to the British plans to cut the budget, and is also worried by sweeteners offered by the UK to ease restrictions on how the central and eastern Europeans spend their cash. Because these concessions - including allowing them to direct structural and cohesion funds towards housing projects - are directed only towards the 10 new member states, the Commission is concerned that it will create a two-tier system in Europe.

Despite the welter of criticism there were some positive signs for the UK. The Slovak Foreign Minister, Eduard Kukan, said the newcomers would have to bargain for a better deal over the coming week. He argued: "We have to negotiate to improve it, but as a basis for negotiations, we take it."