Britain to offer new budget after pressure from Community

BRITAIN said yesterday it would present a new compromise on the European Community budget before the Edinburgh summit, in an effort to break the impasse on EC financing.

John Major yesterday returned from his lightning tour of European capitals with many important issues unresolved. Mr Major's attempts to dispel Irish resistance to his plans to cut EC structural funds were rebuffed by the Taoiseach, Albert Reynolds, in Dublin yesterday. Mr Reynolds reaffirmed his intention to urge rejection of the budget cuts at the summit.

After the meeting, Mr Reynolds emphasised existing European Commission budget proposals as distinct from the British presidency's alternative. Dublin fears the British plan would cut at least IR pounds 2bn ( pounds 2.12bn) from the total IR pounds 6bn it hoped to receive over the next five years from structural funds and the additional 'cohesion' funds for less developed EC states to smooth their transition to the single market.

Mr Reynolds has personal as well as national reasons for defending the higher claim. In his successful June referendum campaign for ratification of the Maastricht treaty, he consistently presented the IR pounds 6bn as a solid commitment from the EC to Ireland. His failure to deliver that would be a disastrous personal humiliation as he struggles to remain leader of the Fianna Fail party after last month's election rout.

As a result of opposition from the 'poor four' countries, Britain will now present revised proposals. The Minister of State responsible for European Affairs, Tristan Garel-Jones, would give no details and said: 'I can't go so far as to say I am confident there will be a budget deal at Edinburgh. It is a difficult dossier and we are doing our best to find a point of balance between the different views.'

Spain is holding out for a substantial increase in allocations for regional spending and the new cohesion fund for infrastructure and environmental projects in the EC's four poorest states.

With three days to go, member states are working to maximise their negotiating hands: financial trade-offs are likely to be held back until the small hours of Friday night and Saturday morning.

Negotiations on the complex Danish problem begin in earnest at a special meeting tomorrow. It is clear that given the objections to Britain's suggestions, discussions will be hard. Mr Garel- Jones said yesterday that 'the proposals were a first stab, presented early to give member states an opportunity to consider them properly. Of couse we expect alterations.' Danish opposition parties have complained that the British proposals do not make it clear that Denmark objects not just to specific elements of the Maastricht treaty, but to the very concept of closer political and economic union. It is this philosphical distinction that grates in more communautaire capitals and which will make a solution to the Danish problem so hard to achieve.

Who's afraid of Maastricht? page 19