UK's Cameron: EU budget deal still within grasp

LONDON Mon Nov 26, 2012 4:05pm EST

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LONDON (Reuters) - Britain believes European Union leaders can still reach a deal to secure a long-term budget after talks collapsed last week, but spending must be cut by billions of euros if London is to back the plans, Prime Minister David Cameron said on Monday.

In comments that will appeal to rebellious anti-EU lawmakers threatening his authority and voters who see Brussels as a wasteful "gravy train", he demanded cuts to European officials' wages, pensions and perks.

"We do believe a deal is still do-able. It is in our interests to get a deal. But that deal can not come at any cost," Cameron told parliament after EU leaders failed to agree the 2014-2020 budget, worth 1 trillion euros ($1.3 trillion).

Cameron has played up support he received from Germany, Sweden, Finland, the Netherlands and Denmark for his calls to limit spending, seeking to avoid the isolation and hostility that often characterizes Britain's fraught European relations.

Britain will seek to "galvanize a coalition of like-minded countries" to curb spending, he added.

Facing a rising tide of anti-EU feeling in Britain, Cameron is under pressure to control Eurosceptics in his ruling Conservatives after they sided with the opposition Labour Party to defeat him in a parliamentary vote seeking EU cuts.

'IT'S WAR'

Adrift from Labour in the polls, Conservatives fear rising support for the UK Independence Party (UKIP), which wants Britain to leave the EU, could hit them at national elections in 2015.

Concerns that UKIP, which has no seats in parliament, could steal Conservative votes prompted one of Cameron's senior legislators on Monday to propose an election pact.

Under the plan, Cameron would promise to hold a referendum on Britain's membership of the EU in return for UKIP not fielding candidates against Conservatives, also called the Tories.

Cameron's office distanced itself from the idea and UKIP rejected the pact.

"No deals with the Tories: it's war," said UKIP leader Nigel Farage. His party received 3 percent of the national vote in 2010.

However, it finished well ahead of Cameron's pro-European coalition partner, the Liberal Democrats, in a by-election this month, taking a 14 percent share.

Cameron received support on his EU position from an unexpected source - Conservative Mayor of London Boris Johnson.

An outspoken EU critic seen as a possible future challenger to Cameron, Johnson withdrew his support for a referendum on whether Britain should stay in the EU or leave.

Cameron, who wants to stay inside the EU, also opposes a so-called "in/out" vote on Europe and has talked instead of seeking voters' consent for a new EU role for Britain.

"The Tories are as split today as they've ever been," wrote Tim Montgomerie, editor of the influential ConservativeHome website. "Anything less than an in/out vote won't remove the dagger from the Tory throat that is known as UKIP."

(Additional reporting by Tim Castle; Editing by Sophie Hares)

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