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Governments slash EUR 4bn from EU budget

Governments slash EUR 4bn from EU budget


(BRUSSELS) - European governments slashed nearly four billion euros from the EU's 2011 budget on Thursday, stripping back ambitions for the bloc to become a "global player" and cutting core farm payments.

The 27 European Union member states agreed a 2011 budget of 126.5 billion euros, more than 3.6 billion euros (4.6 billion dollars) less than the amount sought by the European Commission, the EU's day-to-day executive.

The budget now goes to the European parliament as negotiations with the Commission, standing by its request, must be wrapped up by October.

Among seven members, Britain and Denmark refused even to sign off on reduced budget which still grants the EU an overall increase of 2.91 percent on last year's funding.

British Prime Minister David Cameron told a joint press conference in London with Danish counterpart Lars Lokke Rasmussen that the figures should be progressively "reduced rather than increased."

More than half the total cuts called for -- just under two billion euros -- should come from cohesion funding, mostly grants for the EU's poorer regions which are often linked to accession conditions for the bloc's enlargement.

Investment in transforming the EU into a "global player" and other administrative expenses also take a hit, at a time when the bloc is embarking on a multi-billion-euro roll-out of a worldwide diplomatic service.

All told, these expenses should be slashed by some three-quarters of a billion euros, a statement said.

The Common Agricultural Policy, historically the biggest single EU oulay and one that has traditionally favoured major food producers led by France, should be cut by more than 800 million euros to 57.3 billion euros.

Member states also said they would not accept a salary increase for tens of thousands of EU staff called for by the commission and which is currently the subject of a dispute at the European Court of Justice in Luxembourg.

They further called for a freeze on new recruitment across the EU's Byzantine bureaucracy, except in posts working for member states' interests in the European Council.

Cameron pointed to tough talks ahead as the EU negotiates not only its 2011 spending but also new ground rules including ideas for direct EU-level taxes to prop up the bloc's next major budget cycle from 2014-2020.

"We cannot ask members of the public to pay more in the UK and have to pay more in Europe as well," Cameron said, promising to pursue the issue with vigour at a summit of EU leaders in Brussels on September 16.

The member states gave the commission until the end of September to come back with new figures before parliament gives its verdict.

Patrizio Fiorilli, spokesman for EU budget chief Janusz Lewandowski, said that the commission would take its chances in a reconciliation process set to run for 21 days from October 26.

"It is not our intention to re-do our numbers," he told AFP, adding that the Commission had already imposed its own recruitment freeze for 2011.

Under pressure from member states whose own budgets lie in tatters due to the global recession, Lewandowski has proposed a long-term reduction in direct national contributions worth a combined 30-40 billion euros a year from 2014 but the resulting gap would be filled by new taxes or an end to prized rebates.

Britain, among others, has been quick to oppose any move to direct EU taxes, saying such a move would undercut national sovereignty.

Council adopts its position on the EU draft budget 2011 [Council]

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