EU budget spending increase 2.9%
Next year's EU budget has been finally agreed - a controversial 2.9% spending increase in the midst of a Europe-wide recession and drastic national austerity measures.
Euro-MPs who raised hackles by pressing for a massive 6% rise earlier this year accepted the inevitable and settled on a compromise which sees the annual euro-budget grow to 126.5 billion euro (£106 billion).
British Labour MEPs refused to vote for the deal, insisting that in a recession only a freeze was acceptable.
Earlier this year Prime Minister David Cameron had also pressed for a spending freeze but was outnumbered by a majority of EU governments prepared to go up to 2.9% - but not a euro more. A battle of wills developed between ministers and MEPs, who demanded more say in longer-term EU budget decisions in return for agreeing to accept a 2.9% deal.
In the end the only concession was a say for MEPs in the use of a new "contingency fund" of up to £3.5 billion to be made available in the event of "unforeseen circumstances". But the agreement prevents it being used next year, keeping the total budget at 2.9%.
The lack of an agreement until now had threatened to push the EU into next year with spending frozen at 2010 levels. That would have suited Mr Cameron and others keen that the EU institutions should reflect the belt-tightening going on across Europe.
But many EU officials insisted that more money was needed to fund new policies under the Lisbon Treaty - including the EU's ambitious new diplomatic service. They said the EU budget, funded by member states, could not be equated with national spending restraints and priorities.
EU budget Commissioner Janusz Lewandowski hailed the deal as "a budget for 500 million Europeans".
But Labour's leader in the European Parliament, Glenis Willmott, commented: "At a time when national governments are slashing their spending on vital public services, it is impossible for us to back this budget."
UK Independence Party MEP Marta Andreasen said it was good that the European Parliament had dropped demands for a 6% increase and settled for just 2.9%, but David Cameron could have held out for more.