Belfast Telegraph

EU approves spending hike in budget for 2011BY GEOFF MEADE

Next year's EU budget was finally agreed with 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 €126.5bn (£106bn).

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 £3.5bn 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.

Yesterday budget Commissioner Janusz Lewandowski hailed the deal as "a budget for 500m Europeans".

He went on: "With issues such as energy, the environment, climate, trade, growth and financial stability best tackled at European than national levels, this budget was essential to start the year with the required tools.

Belgian MEP Derk Jan Eppink of the European Conservatives and Reformists group which includes Tory MEPs said many MEPs had "overplayed their hand" by demanding a bigger say in future decisions on funding the EU.