Richard North, 08/06/2005  

Amazingly, The Financial Times is selling the line that Britain and France "are being pushed towards a possible deal over the next European Union budget." This is based on the unlikely premise that Blair is prepared to give up part of the UK's rebate if France agrees to a cut in the proposed €89bn (£59.9bn) rural development fund – the "unlikely" bit being that France would ever countenance such a cut.

It thus takes the Chinese press agency Xinhuanet to report that the finance ministers of the EU member states failed entirely in their meeting which ended yesterday to reach any agreement at all on the vexed question of the budget, with Britain holding the line on the rebate

Juncker is now to hold a last-ditch meeting with Blair next Tuesday, in an attempt to break the impasse. "It's a well organized coincidence," Juncker said of the timing of the talks, where he will present a revised, revised compromise proposal in the hope that the 2007-13 budget can then be agreed at a special meeting of foreign ministers in Luxembourg on 12 June.

Not least of those watching for any weakening of the presidency line, however, is Dutch finance minister Gerrit Zalm, whose own countrymen expressed their dissatisfaction at being the highest per capita contributors to the EU budget in the recent referendum.

He said it was "unacceptable" that the UK alone should enjoy a rebate on its EU budget contribution. "It is impossible to have a system that only benefits one country," he said.

Thus says one of Juncker's aides, "The British rebate is the key to everything," as if we did not know. "It is a psychological key. If it stays where it is, there are quite a few new member states from eastern Europe who would be financing the rebate, and to many eyes that is not quite decent."

Failing Blair doing the "decent" thing, however, he will find that he is going to take on the mess from Juncker and deal with it during the British presidency. And what will he do then poor thing?

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