European leaders have agreed the next seven-year EU budget after two days of talks.
Britain has offered to cut its rebate to help fund the development of the EU's 10 new members, while the European leaders have committed themselves to review all EU spending, including the Common Agricultural Policy.
Reaction to the deal has been generally positive.
UK PRIME MINISTER TONY BLAIR
At some point, you've got to come up with a deal and the important thing is this: If we believe in enlargement, we had to do this deal now. If we didn't, we weren't going to do it in the next year. We would then move to annual budgets.
It would make it impossible for these new European countries to plan ahead and we would do real damage, not just to their cause, but to the cause of enlargement more generally.
So I don't doubt that I'll get a certain amount of criticism from people who say I've gone too far, people who say I've not gone far enough - but, in the end, this is about getting an agreement that allows Europe to move forward.
FRENCH PRESIDENT JACQUES CHIRAC
Everyone realised it took a lot of courage from Mr Blair... in a political situation that was not easy. I wanted to pay homage to him as we all sat around the table and that's what I did.
This negotiation shows that Franco-German co-operation was constant at all times and perfect. Experience shows that when France and Germany have flawless agreement, the construction of Europe goes ahead normally.
EUROPEAN COMMISSION PRESIDENT JOSE MANUEL BARROSO
It was a great result for the British presidency... What would be the signal to public opinion if we can't agree on a
budget? This is indeed a very important political signal for Europe. Europe is on the move.
POLISH PRIME MINISTER KAZIMIERZ MARCINKIEWICZ
I consider myself a young man and I feel young now and all I can say to this is "Yes, yes, yes!
We will make use of this money. We will use it to catch up with the rich countries.
The idea of solidarity is what was important for this budget. The idea of Solidarity was born in Poland 25 years ago and today it is uniting the European Union.
GERMAN CHANCELLOR ANGELA MERKEL
The big cloud has been lifted from Europe.
This deal is in the European interest.
It shows Europe is capable of acting. It is a good sign for the people in Europe. I think that we clearly played an important role but that is always the case as we are a big country.
CHANCELLOR WOLFGANG SCHUESSEL
I have the impression that we are moving, gradually, maybe slowly... in the right direction. What we need now is a united Europe, not a divided Europe.
HUNGARIAN PRIME MINISTER FERENC GYURCSANY
Hungary managed to defend its interests in those tough negotiations. We fought hard and we welcome the deal.
SWEDISH PRIME MINISTER GORAN PERSSON
It is very wise that it was the British who got to handle the budget decision. It was good for the Union.
It would have been impossible for Luxembourg to get this far... and it would
have been impossible for Austria.
IRISH PRIME MINISTER BERTIE AHERN
We have reached agreement on the future of Europe... the British presidency... has finished on a high. The future of [Common Agriculture Policy] was central to
these negotiations and we are happy with that area.
DANISH PRIME MINISTER ANDERS FOGH RASMUSSEN
There is reason to be happy that we got a deal at all, because that is politically very, very important for the EU. We can now again get momentum after a year which has been a bit
The new German Chancellor Angela Merkel has played an immensely positive role in the negotiations - in part by contributing in relations to both France and Poland, and in part by, at a key moment, showing flexibility when it came to the overall expenditure ceiling.
LUXEMBOURG PRIME MINISTER JEAN-CLAUDE JUNCKER
The fact that we were able to conclude the deal has to be applauded because it would have been a total drama, in fact, if we wouldn't have come to a good conclusion.
I would have wished a more ambitious budget, but I have to say that, taking into account all the political aspects and domestic aspects, people have to bear in mind that the deal is not the worst one we could have concluded.