Britain and France set for European summit showdown over EU budget

European Flag

Britain and France are heading for a battle at a European summit on the EU's trillion-euro budget this week after François Hollande singled out the UK as the biggest obstacle to a breakthrough agreement.

As Downing Street indicated that David Cameron would join forces with Angela Merkel to demand cuts in the budget, the French president criticised those calling for "swingeing cuts" while also seeking to preserve their rebates. This was a reference to the unloved British compensation won by Margaret Thatcher in 1984.

The French leader also indirectly criticised Cameron's recent speech on Europe pledging a referendum on UK membership of a reformed EU, stating that there could be no "a la carte Europe."

In his first address to the European parliament in Strasbourg two days before what is certain to be a gruelling Brussels summit of EU leaders on a new seven-year budget, Hollande made clear that his key objective was to defend the contested common agricultural policy which eats up almost 40% of EU spending and of which France is the biggest beneficiary.

Hollande said he was attending the Brussels summit on Thursday and Friday looking for a compromise agreement. "I'm told that can't happen with the United Kingdom. But why should one country decide for the other 26?"

This week's summit follows a failed first attempt to reach a deal on the budget in November, with the British arguing for further reductions of at least €30bn (£26bn) on the overall package of €973bn proposed by Herman Van Rompuy, the summit chair.

Cameron, who won support for his position from the Germans, Dutch and Scandinavians in November, told the cabinet on Tuesday that spending needed to be reduced below the Van Rompuy proposal. The prime minister, who spoke to Merkel on Sunday, warned ministers that negotiations are often difficult and can take time.

His spokesman said: "The position is very much that of November where we were working with countries such as Sweden, the Netherlands, Denmark and Germany because we all agree that spending needs to be reduced further. It is something the prime minister and the German chancellor reiterated on their phonecall on Sunday. I would describe it as very much a continuation of the close working we had at the November European council. In terms of reaching agreement – these negotiations have always been difficult. I don't see these as being any different. They can often take quite considerable time. You can sometimes need several goes at it."

But in a sign that Britain could be a more isolated this week, Merkel is to go to Paris on Wednesday to try thrash out a deal with Hollande ahead of the summit. Mario Monti, the Italian prime minister, also needs a favourable budget outcome before general elections in a fortnight and will line up alongside Hollande.

"Monti and Hollande are going to be very difficult," said a senior EU official. "Hollande has more to lose from what's on the table at the moment. It will be left to France and Italy to foot most of the bill."

EU diplomats say the Franco-British sparring is part of the ritual that routinely accompanies the bruising budget negotiations, not least because the two rivals and allies tend to measure themselves against each other.

But both governments also say they could veto a budget agreement if their bottom lines are jeopardised.

David Lidington, the Europe minister, said Cameron wanted to reach an agreement "but not at any price."

In the debate following the Hollande speech, Cameron's EU policies – outlined in a recent much-delayed speech in London – came under assault.

Hannes Swoboda, the leader of the centre-left in the parliament, said the EU was much more than a single market. "It is a political construct."

Joseph Daul, the French leader of the centre-right European People's party in the parliament, said Britain aimed "to unpick, unravel the European Union little-by-little."

While Hollande mounted a stout defence of agricultural spending guaranteeing generous subsidies to French farmers, Lidington bemoaned "a lack of ambition on agricultural reform… Some of this is depressing."

Hollande's defence of the common agricultural policy also earned trenchant criticism from Dany Cohn-Bendit, the MEP and left-liberal European federalist.

The tens of billion spent on farming was a gift to the big food and agri-conglomerates, he said, adding that "80% of funds go to 20% of farmers. That's not solidarity".

Officials and diplomats say the stakes are very high for the summit since if no seven-year budget is agreed, it could be another two years before a consensus is reached because of German elections in September and European elections next year.

Powered by Guardian.co.ukThis article was written by Ian Traynor in Brussels and Nicholas Watt, for The Guardian on Tuesday 5th February 2013 18.52 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010