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Last Updated: Friday, 2 December 2005, 13:19 GMT
Blair pushes December budget deal
Tony Blair and Ferenc Gyurcsany
Hungary's prime minister (right) said agreement was a long way off
UK Prime Minister Tony Blair has said it is crucial for the new EU member states that the EU agrees on its 2007-13 budget this year.

It would not get any easier to reach a deal in 2006, he said after talks with central European leaders in Budapest.

Mr Blair was trying to persuade them to agree to a 10% cut in EU development aid as part of a reduced EU budget.

Failure to reach a deal by 2007 would leave the new members with far less money to spend, he said.

Diplomats quoted by Reuters said the leaders were prepared to consider a cut in development funding, but not one as big as 10%.

UK rebate 'could rise'

Mr Blair said the UK wanted to pay its fair share towards the cost of enlargement and was ready to give up part of its 5.6bn euro (3.8bn) rebate.

We are still far from agreement today
Hungarian Prime Minister Ferenc Gyurcsany

However, he said there was no question of giving up the rebate without major reform of the Common Agricultural Policy, and that it might actually rise in nominal terms.

Mr Blair's spokesman told journalists in London that the UK may be prepared to give up between 12% and 15% of the rebate.

"We are still far from agreement today," Hungarian Prime Minister Ferenc Gyurcsany told a news conference after the meeting with Mr Blair and the leaders of the Czech Republic, Poland and Slovakia.

"We want to come to an agreement but not at any price."

pie-chart showing breakdown of eu expenditure

Mr Blair had a similar reception in Estonia on Thursday, where he met the leaders of the three Baltic countries.

Estonian Prime Minister Andrus Ansip described Mr Blair's proposal as "unacceptable", talking to BBC television's Newsnight programme on Thursday.

Asked if he believed a deal on the budget was possible by the time the UK's EU presidency ends, he said: "Let's wait for the whole proposal and then we will know something about the figures and we can see what kind of deal there will be."

'A surrender'

Attempts last June to reach a deal on the budget collapsed when the UK rejected calls to give up the rebate without an overhaul of the Common Agricultural Policy, something France - as the biggest farm subsidy beneficiary - refused.

The UK's offer now to cede some of its rebate - won by Margaret Thatcher in 1984 - comes without any fundamental reform of farm subsidies, though Mr Blair is still pressing for one in the middle of the 2007-13 budget period.

If a budget is not sorted soon millions in Eastern Europe will lose out on vital funds for development
David Phillips, Cambridge, UK

The UK is expected to have to increase the amount it pays into the EU but the exact figures will be published next week.

Conservative Party Europe spokesman Graham Brady said it was "a surrender" which could result in the worst of all worlds.

"We might see less money going to the new member states, no reform of the CAP and it's going to cost the British taxpayer," he said.

The UK proposal will be discussed by EU foreign ministers on 7 December, and by heads of state and government at a summit in Brussels on 15 and 16 December - two weeks before the UK ends its presidency.

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Watch Tony Blair as he tours eastern Europe

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