EU: Britain issued new proposals for a slightly bigger EU budget yesterday but did not offer any further cuts to its rebate ahead of a crucial European summit today.
The proposal, immediately rejected by Poland and France, would increase the 2007-2013 budget by €2.5 billion from its previous level last week.
However, at €849.3 billion EU spending would remain significantly below the figure - €871 billion - proposed by former EU president Luxembourg in June.
European commission president José Manuel Barroso said the money was not enough to fund the EU's ambition to continue expanding, an ambition supposed to be shared by Britain.
The new proposal offers several member states extra money when compared to the original British offer of last week. Ireland gets an extra €250 million in rural development funding under the package, despite cuts to this portion of the EU budget. Spain gets a three-year extension to its eligibility for cohesion funding, worth €450 million, and €50 million in funds for its enclaves in Morocco.
Looser conditions on drawing down EU cash would be extended from the 10 new EU member states to Greece and Portugal; and Slovakia and Lithuania would benefit from funds worth €205 million to help decommission nuclear power plants.
Sweden and the Netherlands would benefit from an extra €415 million in savings on payments into the budget while new member states would see €1.7 billion less in cuts to their structural funding, according to figures presented by British officials.
British foreign secretary Jack Straw said yesterday that the figures were realistic. "We in the UK are working extremely hard for a deal this time but I am clear that no deal is preferable to a bad one," he said.
French foreign minister Philippe Douste-Blazy rejected the proposal and insisted on a deep reform of the British budget rebate - a mechanism agreed in 1984 to compensate Britain for its small agriculture sector.
"We hope that the British authorities will understand the need for a complete review of its rebate mechanism. Without a change on this point, France will not give its agreement" to the budget proposal, Mr Douste-Blazy told the French senate.
In its original proposal Britain offered to pay an extra €8 billion into the EU budget by either increasing VAT contributions or reducing the rebate. The new British proposal did not offer any further cuts in the rebate, which would rise from €5.6 billion this year to an average €7 billion a year in 2007-2013 under its proposal.
Some of the toughest negotiations at today's summit will be over the British rebate, which most member states want to change but which Britain says it won't permanently change without reform of the common agricultural policy.
Taoiseach Bertie Ahern said Britain must yield more ground on its rebate and on spending.
"Some movement has to be made on the rebate," he said.
The need for a new offer was underlined by Polish prime minister Kazimierz Marcinkiewicz.
"This proposal, if it remains unchanged, will be vetoed by Poland," he said.