European Parliament faces budget showdown
The European Parliament has entered a dispute over the 2007-2013 EU budget by supporting a proposal to spend 1.07% of member states’ gross national income.
The figure lies between the 1.14% suggested by the European Commission, and the 1% demanded by the six largest net contributors to EU funds.
The issue will be discussed at a European summit in Luxembourg next week.
The UK is being pressurised to give up its rebate, awarded in 1984, but says that it will use its veto to preserve it.
The Luxembourg presidency of the European Union is formulating a compromise proposal and is holding a series of bilateral negotiations with European leaders.
Prime Minister Tony Blair will be the last to meet the Prime Minister of Luxembourg, Jean-Claude Juncker, who proposes holding the British rebate at its current level, and gradually phasing it out.
The European Parliament has said that it will reject any agreement that allocates too little funding for research and development and regional aid. This is thought to be a reference to a compromise proposed by Luxembourg in May, which would have take approximately 50bn euros from the “Lisbon Agenda” programme to make Europe a more competitive economy.
It would also have reduced the regional aid budget by 40bn euros.
Many governments believe that reaching a budget agreement would show that the EU was back on track following the French and Dutch rejection of the European constitution.
Luxembourg negotiators think the UK may compromise on its rebate if French President Jacques Chirac agrees to compromise on agricultural aid.
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