EU BUDGET: FOREIGN MINISTERS oVERY CRITICALo OF UK FINANCE PROPOSALS.

Ministers were reacting to a compromise proposal tabled by the UK on December 5 which seeks to limit the EU's medium-term budget to euro 847 billion over seven years, while cutting 14 billion off regional development funds to the ten new member states. The UK has offered to cut its rebate by euro 8 billion over the period.

UK Foreign Secretary Jack Straw said after the ministerial talks that there would be a new proposal early next week in time for the summit meeting of EU leaders on December 15-16.

Philippe Douste-Blazy, as expected, was one of the most critical speakers. The French minister insisted that the current proposal was onot the point of departureo for a deal and called on the UK to present a new compromise. He insisted that the UK should offer to cut euro 14 billion from its rebate to make its contribution to paying its fair share of the costs of enlargement.

Mr Straw said in response to demands from France for a higher cut in the rebate that the UK was prepared to make a fair contribution to the cost of enlargement but could not accept a situation where the UK pays twice as much as France and Italy, two countries with similar sized economies. He also insisted that the review clause remained open and stressed the need to ensure that there could be further reform before the end of the budgeting period.

Around nine countries (Portugal, Luxembourg, Italy, Spain, Belgium, Poland, France, Lithuania and Sweden) were very critical of the UK proposals. Portuguese Minister Diogo Freitas do Amaral said that there were oserious...