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Last Updated: Monday, 5 December 2005, 18:59 GMT
Analysis: An 'un-European' proposal
By Mark Mardell
BBC Europe Editor

The British government is willing to pay more than 1bn euros a year more into the European Union budget in order to reach a deal by the end of the British presidency in December.

Aid to the new 10 member states would be cut under the UK proposal
The money could either come off the rebate won by Mrs Thatcher in 1984 or by increasing the contribution to the EU through VAT receipts.

Government sources say they are not bothered how the money is paid, the aim is for Britain to pay its "fair share" : roughly the same as France and Italy.

But European Commission President Jose Manuel Barroso has rejected the proposal in the strongest possible terms.

Just seconds after the foreign secretary sat down he put the boot in, calling the proposal "unacceptable".

Anybody who wants to put down a veto is being encouraged to do so by Mr Barroso himself
The Polish Prime Minister, Kazimierz Marcinkiewicz, has followed suit.

The head of the Commission does not of course make the decision - that is up to the heads of government of the European Union when they meet on 15 December - but anybody who wants to put down a veto is being encouraged to do so by Mr Barroso himself.

While critics at home will not like the fact that Britain is willing to pay more throughout Europe, there is likely to be dismay that Prime Minister Tony Blair expects the newest member states to bear the brunt of the pain.

New members

But his calculation is that those states would rather swallow their pride and get a deal in December rather than wait for endlessly for the money.

The maximum total figure for expenditure for EU 27 for the period 2007-2013 is 846,754 million euros
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While others may find the deal distinctly "un-European" in its philosophy, it does not hurt them financially.

The government has for the first time published details of its proposals ahead of the summit of EU leaders in Brussels on 15 December.

About 10% would be cut off the money going to the countries which joined the European Union last year but the rules would be loosened.

They would be able to spend the money for an extra year, housing projects would be included and they would have to find 15% not 20% of their own money toward the projects.

Seven billion euros would be cut from the last proposals on rural development payments and 1bn euros off the European Union bureaucracy, which would hit Luxembourg and Belgium.

The Germans and Dutch would be better off under the deal, Swedes, French, Spanish and Italians would stay much the same.

Braced for criticism

Government sources say the Britain would pay 8bn euros more over seven years through increase VAT payments or cutting the rebate.

Downing Street say they expect to soak up a lot of hostility while people after looking at the fine text
The European Union is trying to fix its budget for the years between 2007 and 2013.

In June a summit broke down when Britain and others objected to the deal on offer from Luxembourg, which then held the presidency.

The British proposal is for a budge of 846bn euros, which is 25bn less than the Luxembourg proposal. But it is still an increase of 90bn euros on the current budget.

Downing Street say they expect to soak up a lot of hostility while people after looking at the fine text. But the Commission has tried to wing this bird even before it can get off the ground.

See why reaching a deal on the budget is important

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