Commission unveils £106 billion euro-budget for next year

Revised plans for next year's euro-budget were unveiled yesterday - adhering to a 2.9 per cent increase demanded by EU ministers in the face of continuing efforts by MEPs to win a 6 per cent rise.

But the European Commission insisted there were new concessions to MEPs in its latest proposals, in the form of a "contingency fund" of up to 3.5 billion euro (3 billion) in the event of "unforeseen circumstances".

Talks on the EU budget ended in deadlock last month after Britain led a group of countries refusing to offer MEPs a bigger say in future spending priorities.

Yesterday EU budget Commissioner Janusz Lewandowski said the commission was keen to get the €126.5 billion (106 billion) budget agreed by the end of the year.

Failure to do so would mean an effective freeze in EU spending until the budget row is settled.

That would suit Prime Minister David Cameron, who wanted a spending freeze, but agreed with other ministers to accept a 2.9 per cent increase, but not a euro more.

Mr Lewandowski said it was now crucial to settle a deal by 31 December. "Despite what some say, the EU budget is not a budget for Brussels," he added.

"The functioning of the EU institutions amounts to less than 6 per cent of the total budget, which means that almost 95 per cent of the budget goes to boosting Europe's economic growth, to towns and regions, to scientists, farmers and students, to protecting our environment, tackling climate change, making our transport safer and enabling Europe to act as one on the world stage."