European Union budget ministers yesterday approved a draft budget for 1998

almost unchanged from 1997, reflecting budgetary efforts pursued at national level to qualify for Europe's single currency.

Spending is set to increase by only 0.7 per cent to 84.77 billion European currency units (£62 billion) in 1998. "The atmosphere in member-states is one of austerity. The European Community must follow this example,"

Luxembourg's Budget Minister Marc Fischbach told a news conference.

Next year's draft budget must be discussed by the European Parliament before being formally approved by budget ministers.

According to the preliminary budget, expenditure on the bloc's Common

Agricultural Policy, which traditionally takes up almost half of the EU's budget, would increase only 0.45 per cent to 40.987 billion ecus.

The ministers, however, reinstated 1.4 billion ecus for cereal farmers which the European Commission, which drafts the budget, had cut, arguing that cereals growers had been over-compensated in the past four years.

This is the second year that the EU has adopted a tight budget. This reflects budgetary discipline adopted by its 15 EU national governments which must limit their deficits to 3 per cent of gross domestic product in 1997 and maintain sound finances in following years to qualify for the single currency.