End British EU rebate, says Chirac

France's President, Jacques Chirac demanded an end to the UK's €5bn (£3.5bn) budget rebate from the EU, won by Margaret Thatcher at a summit in Fontainebleau in 1984.

France's President, Jacques Chirac demanded an end to the UK's €5bn (£3.5bn) budget rebate from the EU, won by Margaret Thatcher at a summit in Fontainebleau in 1984.

At the end of a summit yesterday at which M. Chirac won key concessions on social and economic policy, he said: "We can only really have a balanced agreement if we call into question the British cheque, which is no longer justified."

EU leaders are due to meet in June to try to agree an EU budget for the years 2007-13. But in a BBC Radio interview yesterday, the Foreign Secretary, Jack Straw, said the Government would be willing to wield its veto to protect the rebate.

The European Commission President, Jose Manuel Barroso, argued that 10 countries that joined the EU last year are "much poorer than the UK", and that Britain "is much more prosperous than it was before".

The annual payments were designed to compensate the UK for its relatively low receipts from farm subsidies.