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Summit opens battle over EU's long-term budget

BRUSSELS (Reuters) - Wrangling over the European Union’s long-term spending plan for 2014-2020 kicked off at its summit on Friday, months earlier than anticipated, with the government securing considerable support for a lean budget.

German Chancellor Angela Merkel talks to Prime Minister David Cameron (R) during an European Union leaders summit at the EU Council in Brussels October 29, 2010. REUTERS/Francois Lenoir

Fighting among the EU’s 27 governments over the long-term budget, which could be worth nearly 1 trillion euros (877 billion pounds) could typically be expected to start next June, after a planned publication of proposals by the executive European Commission.

But Prime Minister David Cameron insisted on discussing the issue at a meeting of leaders of EU member states and managed to include a declaration that the budget will be moderate, in an early draft of the summit’s final statement.

The plan outraged some countries advocating a bigger EU budget, such as Poland and Hungary, which were struggling to remove or soften the declaration, saying such a major political move must be discussed properly, diplomats said.

“Heads of state or government stressed that, at the same time as fiscal discipline is reinforced in the European Union, it is essential that the EU budget and the forthcoming (long-term budget) reflect the consolidation efforts being made by member states,” the summit’s statement said.

Britain, whose often eurosceptic Conservative government has cut national spending to reassure financial investors, said the statement was a victory in its struggle for EU austerity.

“There is a need to protect British taxpayers from reckless spending in Europe,” Cameron told a news conference. “Of course if member states are cutting their budgets the EU should be doing the same thing.”

Government diplomats said the position was supported by Germany, the Netherlands and some other net payers into the budget, as well as EU Council President Herman van Rompuy.

The EU budget, worth about 130 billion euros annually, represents about 1 percent of the bloc’s economic output.

BAD SIGN FOR BIG BUDGET

An early declaration at the highest political level that the budget should be modest would hamper efforts of EU net financial beneficiaries from central and eastern Europe, as well as the Mediterranean, to keep the current spending level or raise it.

Polish Prime Minister Donald Tusk publicly played down the importance of the statement, saying Britain secured it as a reward for backing an EU treaty change demanded by France and Germany to shore up fiscal discipline in EU countries.

“I am a calm realist. I am not euphoric, but there won’t be any drastic reduction (of the EU budget),” he told reporters.

Other sticking points in budget talks will include the future of generous farm subsidies and Britain’s cherished rebate on contributions to the bloc’s coffers. Net payers will probably also seek to trim EU aid for poorer regions.

Farm subsidies and regional funds jointly account for more than 70 percent of the budget. The rest goes to foreign aid, internal security and administrative costs.

In a related move, Britain won support from France, Germany and others at a European Union summit on late on Thursday for its opposition to a planned 5.9 percent increase in the EU’s budget for 2011.

Additional reporting by Adrian Croft in London and David Brunnstrom in Brussels; Editing by Rex Merrifield/Elizabeth Fullerton/Ruth Pitchford

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