EU BUDGET: FOREIGN MINISTERS FAIL TO AGREE ON LUXEMBOURG COMPROMISE.

Deadlock was foreseeable even before the meeting started. The UK Chancellor of the Exchequer, Gordon Brown, made clear earlier in the day that UK would, if necessary, use its veto to protect its rebate - worth around euro 3 billion a year. UK Foreign Secretary Jack Straw repeated the message as he went into the meeting, and maintained his position throughout the discussions, in the face of widespread criticism from his counterparts from other member states.

The Luxembourg compromise's tight rein on overall EU spending was broadly welcomed by the six member states seeking to limit the budget - the UK, France, Germany, Austria, Sweden and the Netherlands (see also previous issue of Europe Information), and Italy criticised the level of farm spending envisaged. But member states that are traditional beneficiaries of EU funding - notably Spain, Portugal and Ireland, as well as most of the new member states, attacked what they saw as a too narrow approach. Denmark and Ireland also...