Friday, December 11, 1998 Published at 00:43 GMT
Blair faces rebate row
Tony Blair arriving in Vienna in defiant mood
The UK Prime Minister Tony Blair has flown to Vienna hoping to fight off attempts by other EU leaders to reduce the UK's £2bn budget rebate.
But regardless of the bullish tone, the UK will come under fierce pressure from France and Germany during the two-day summit to offer up its £2bn-plus annual rebate - won after Margaret Thatcher demanded "I want my money back" in 1984 - as part of a radical reform of Europe's annual £60bn spending.
As Mr Blair departed, the UK opposition leader, William Hague, accused him and his government of "naivete" in its dealings with Europe and said ministers were too ready to "run with the herd" in the EU.
Blair will 'go with the flow'
Since last September's German elections, 13 of the EU's 15 member states are now run by social democratic or socialist governments.
In an interview with Vienna's Kronen Zeitung newspaper Mr Blair conceded the summit would be the scene of fierce discussions over economic reform designed to pave the way for enlargement of the EU.
But he added: "I don't think it should become an ugly discussion. I think it is important it is resolved on the basis of fairness." He insisted the UK has "a strong position in respect of the rebate".
No German blank cheque
Strength of feeling on the issue among other European leaders, however, was highlighted again when Germany's chancellor Gerhard Schröder warned in a speech to his parliament that "Europe's problems cannot and will not be solved with the German chequebook".
He also warned the German people could lose faith with Europe if economic issues were not resolved.
Mr Schröder agreed a joint position with Mr Blair earlier this week to block any move towards a common income tax or corporation tax on company profits.
But the UK will still face demands to agree to a "withholding tax" on savings held in another member state, which Mr Blair fears could hurt the City of London.
Meanwhile, Mr Blair is holding out the prospect of a re-think on the abolition of duty-free as a UK gain from the summit.
If a reprieve is forthcoming, it would allow Mr Blair to come away from the summit claiming to have scored a victory.
The government will also be hoping the duty-free issue helps deflect domestic attention from the undoubtedly bigger subjects of the budget rebate and tax harmonisation. The last thing Tony Blair wants is for them to dominate the headlines of Eurosceptic tabloid newspapers such as the Sun.
Accompanying him in Vienna are Foreign Secretary Robin Cook and Chancellor Gordon Brown, who will hold talks with their European counterparts.
UK Politics Contents
A-Z of Parliament