Britain has refused to sign off the EU accounts in a protest against budget mismanagement.

Chancellor George Osborne joined forces with Dutch and Swedish after 17 years in which EU auditors refused to give the EU's annual spending plans a clean bill of health.

The Chancellor, with Jan De Jager of the Netherlands and Sweden's Anders Borg, voted against signing off the 2010 EU budget, and issued a joint statement declaring: "Member states should uphold the same high standards for the EU budget as they would for national budgets.

"We should remember that national taxpayers stand behind the EU budget, and that's why we are calling for important and urgent improvements to the quality of EU financial management."

It is the first time the UK has withheld its vote of approval, but the act is symbolic - the annual procedure to "discharge" the budget does not affect the sums already spent in the relevant year.

But controversy still rages because errors in the handling of the annual budget - 80% of which is administered through national and regional authorities - have prevented the EU financial watchdog giving more than "qualified audit" to the books.

Sometimes the auditors expose fraud, but more often cite "mismanagement" as a reason for not signing off the accounts.