Ministers agree to £2bn EU budget cuts

MINDFUL of the looming deadline for the decision on membership of the first wave single currency countries, EU budget ministers last night reached agreement on trimming some £2 billion off the Commission's proposed member state contributions to the EU next year. The result effectively freezes EU spending at this year's target level of £71 billion.

Officials claim that the decision would not mean significant cuts in pledged programmes as there has been both substantial overestimation of budgets in the past, and lower than anticipated take up of structural funds by member states.

The low take up applies to all the structural fund budget lines except that for the cohesion group of poorer countries (Objective I), Ireland included.

Objective I countries held up agreement until they got an exemption from the cutbacks for their programmes.

The low take up by the richer countries is attributed to the failure by states anxious to cut national budgets to come up with required matching funding for programmes.

Ministers agreed to cut payments to the agriculture budget by £800 million, across all sectors except beef, and the same to the structural funds budget.

The package now goes to the European Parliament which shares ultimate budget authority, and will return to the Council of Ministers later in the year in amended form.

But, yesterday, representatives of the Parliament met ministers and, while agreeing to the cuts in farm payments, put down clear markers that they would not approve the budget unless there was a substantial revision of the later budget perspectives for 1998/99 to include the £800 million budget line sought by the Commission President, Mr Jacques Santer, for Trans European Networks.