EU budget: Europe seals deal on financing future

An extra €13.1 billion, including an increase of €2.5bn from the UK’s annual rebate, is the price of a Brussels deal on EU financing between 2007 and 2013.

EU diplomats have released details of the figures behind an agreement sealed in the early hours of December 17.

The deal brokered by British leader Tony Blair takes total EU expenditure in the seven year period up to €862.4bn - a significant hike on proposals tabled by the UK on Wednesday.

Final spending ceilings of 1.045 per cent of Europe’s Gross National Income are precisely half way between UK proposals unveiled on Wednesday and a June proposal of 1.06 per cent.

London will lose €10.5bn - €1.5bn a year – from Britain’s 21-year old annual rebate in a giveaway aimed at buying EU agreement after bitter talks that dragged on for over 17 hours.

All elements of the UK EU rebate calculated against the costs of European enlargement will be phased out by 2013, according to draft Brussels budget proposals.

London has offered a “progressive percentage reduction” culminating in a  sacrifice of any abatement set against EU cash spent on Europe’s poorest areas.

By 2011, the UK will only receive a rebate against EU expenditure on agriculture – the step by step mechanism means the UK will lose €10.5bn of abatement cash.

But in 2013 the change will become fixed and the UK will fully contribute to the costs of enlargement receiving a rebate on spending in in the EU15 and farm expenditure in the EU25.

Wording setting the terms for a mid-term budget review in 2008 to 2009 have been diluted to remove reference to “adjustments” between 2007 to 2013.

According to UK officials Poland will get an extra €2bn on previous proposals, extra cash wrangled by Warsaw brinkmanship.

The Netherlands – the EU’s highest per capita contributors – will have its bill eased by €1bn.

Intense and gruelling negotiations over the seven year finance package for an enlarged EU spilled from Friday into the early hours of Saturday.

Poland and Hungary took an EU summit to the brink as deadlines came and went after Blair trailed a take-it-or-leave-it offer at 21.25hrs on December 16.

Extra cash will benefit new member states that had fiercely fought deep cuts to Brussels financing pushed by the British EU presidency.

The bill will be picked up by Europe’s paymasters Germany, Britain, France, Sweden, Netherlands, and Austria.

Agreement followed major concession from the UK, compromise, Blair  hailed, as a turnaround in the EU’s fortunes following a year of setbacks.

"This is an agreement that allows Europe to move forward. If we'd failed to reach an agreement at all, I think that Europe would have been in a very severe crisis,” he told journalists.

European Commission President José Manuel Barroso also trumpeted the budget agreement after a 2005 that saw the demise of the EU constitution.

“This is a very important political signal for Europe. Europe has avoided paralysis. Europe is on the move again. The cost of not having an agreement would have been enormous,” he said.

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