European Parliament hints at compromise on EU budget

BRUSSELS (Reuters) - European Union member states will have to give up ground if a deal is to be struck on next year’s EU budget, the European Parliament’s chief budget negotiator said on Monday.

Most EU member states want the increase in the 2011 budget to be capped at 2.9 percent over 2010, raising it to 126.5 billion euros (109 billion pounds). But the European Parliament is looking for a 6.2 percent increase.

Britain, Germany and France are among the countries most insistent on a lower cap, saying it is unacceptable for the budget to jump more than six percent at a time when most of the EU’s 27 member states are aggressively cutting spending.

Poland’s Sidonia Jedrzejewska, parliament’s rapporteur on the budget, said she believed a compromise could be reached by a deadline this week, but it would depend on countries accepting that the EU cannot provide more services with less money.

“There is a discrepancy between what member states expect from the EU and what they are willing to pay for,” she told reporters, listing the EU’s new diplomatic service, the EAS, as one costly initiative that still needed to be funded.

“The member states need to understand that if you want to put a stop on the EU budget, then you have to put a stop on your ambitions too. You can’t have more for less.”

British Prime Minister David Cameron has made a particular point of insisting that he will not accept a budget increase over 2.9 percent and faces a backlash in the domestic media if he is seen to give up any ground.

Jedrzejewska suggested that an increase of 4.5 percent -- effectively splitting the difference between 2.9 and 6.2 -- was a possible outcome.

If this month’s negotiations fail then the budget, which must be approved by all member states, will be frozen at 2010’s level and disbursed in 12 equal instalments.

Jedrzejewska said that should be avoided as it would mean even less money than member states proposed to fund EU programmes and run everything from the European Commission to the European Court of Justice.

Even if a 4.5 percent compromise is agreed, she said ‘amending budgets’ -- additional spending requests made by parliament during the course of the year -- would have to be passed during 2011 to meet all proposed spending.

Among items that still need to be covered by the budget are payments to Africa, Caribbean and Pacific banana producers as part of a WTO trade dispute settlement, flood-relief aid to Pakistan, funding for the Palestinian territories and investment in ITER, a nuclear fusion facility, Jedrzejewska said.

Editing by Ruth Pitchford