European Union leaders agreed a long-term budget after Britain trimmed its cherished EU rebate to help boost overall spending in the 25-nation bloc, EU president Britain said.
The deal came after Britain agreed to cut its rebate by €10.5 billion over seven years and proposed a 2007-2013 budget of €862.3 billion, or 1.045 percent of EU output, up from 1.03 percent in an earlier proposal.
"We have reached agreement on the future of Europe," said Taoiseach Bertie Ahern who was in Brussels for the negotiations. "We congratulate the British presidency, it has finished on a high."
Failure to agree a budget would have damaged the credibility of the bloc, already reeling from failing to agree a proposed EU constitution earlier this year - and from bitter recriminations after an abortive attempt to agree a budget in June.
It would have also prevented the 10 newcomers from using the hefty funds available to modernise their economies and bring them into line with their wealthier western cousins.
"There is a deal, it's a good deal," Danish Prime Minister Anders Fogh Rasmussen told reporters.
British Prime Minister Tony Blair spent the day in meetings with leaders trying to reconcile east European states' demands for more aid with a domestically sensitive further cut in the British rebate - while putting a review of farm spending on the long-term agenda.
The budget included a call for the executive European Commission to publish in 2008/09 "a full, wide-ranging review covering all aspects of EU spending" including farm subsidies and the British rebate.
The wording was a fudge between Britain's determination to cut farm subsidies which mostly benefit French farmers before 2013, and France's insistence that the level of agricultural payments must remain pegged until then under a 2002 deal.
A British official said the rebate cut would still ensure that Britain's net payments to the EU were in rough parity with those of France and Italy, a key British objective.
However, British Eurosceptics contended he had sacrificed part of the rebate which prime minister Margaret Thatcher won in 1984 with no guarantee of any change in the Common Agricultural Policy before 2014 at the earliest.