Britain on Monday proposed €24bn of cuts to the draft European Union budget in a compromise package that diverts billions of euros from poor eastern European countries to the UK Treasury.
The 2007-2013 budget plan by the British EU presidency was described as “cynical” by French diplomats and “unacceptable” by Kazimierz Marcinkiewicz, Polish prime minister.
But some EU officials believe it could form the basis of a deal at next week’s European summit in Brussels, and Jack Straw, British foreign secretary, insisted: “These are good proposals for the UK and good proposals for Europe.”
The draft budget proposes a cut to €847bn in the €871bn ($1,045bn, £610bn) seven-year package proposed by the Luxembourg EU presidency in June.
The biggest losers would be the new EU members of central and eastern Europe, who would give up €14bn of the €160bn earmarked for new roads and environmental schemes.
The British draft also demands cuts of €7bn to rural development in western Europe, a shaving of €2bn off the farm subsidy budget and €1bn off the cost of EU administration, mainly in Brussels and Luxembourg.
Mr Straw said that slashing the budget from the €1,025bn once proposed by the European Commission to €847bn was “a great achievement”.
A large part of the savings will go directly to the UK, whose net payments to the seven-year budget would decrease from €70bn under the Luxembourg proposal to €58bn, broadly in line with the contributions of France and Italy.
However, Britain would forgo €8bn of its controversial budget rebate, a move condemned as a “betrayal” in the British press, either through a reformed rebate mechanism or by increasing its payments of VAT receipts to Brussels.
Without reform Britain would have paid just €50bn, making it the second smallest net payer after Cyprus.
José Manuel Barroso, the European Commission president, claimed the budget was unambitious and unfair to the new EU members. “This is a budget for a mini-Europe,” he said.
The British believe the eight new EU members from the former Soviet bloc could accept a cut in their headline EU receipts, not least because they want an early deal to ensure the money starts flowing in 2007.
To sweeten the pill, Mr Straw proposed giving EU members more time to spend the money and said it could be spent for the first time on housing projects. There would also be a cut from 20 per cent to 15 per cent in the national “matching funds” required to access the EU cash.
Jean-Claude Juncker, the Luxembourg prime minister who clashed with Tony Blair, his UK counterpart, in June over the budget, said the British draft could be “promising” if it could be sold to the new member states and if the UK gave up more of its rebate.
However, Mr Marcinkiewicz, the Polish premier, criticised the plan but did not dismiss it out of hand. “The proposal is not based on solidarity. In this form it is unacceptable,” he said.
Mr Blair will hold a series of bilateral meetings with European leaders later this week to try to secure a deal.
