09/11/2012 16:15 GMT

European Union 'Breathtaking' Demand For Bigger Budget, Says Greg Clark

The Government this afternoon fired a fresh broadside at Brussels over "breathtaking" demands for a bigger EU budget.

Financial Secretary to the Treasury Greg Clark rounded on the European Commission at the start of acrimonious talks to agree EU spending levels for next year.

The Prime Minister is already on the warpath over pressure for an inflation-busting 11% increase in the EU's 2014-2020 financial programme - threatening a veto at a summit in a fortnight unless there is at least a spending freeze, if not cuts.

Today, the target was the 2013 budget, with the Commission demanding a 6.8% increase on this year's 129 billion euro (£103 billion) total.

Eurocrats also want an extra 9 billion (£7.2 billion) on the 2012 budget because of insufficient funds to cover all policy commitments.

British efforts to force a freeze for next year were defeated earlier this year, but fellow EU governments did slash the 6.8% demand to 2.79%.

However, last month MEPs voted to reinstate the full 6.8%, triggering tonight's "conciliation" talks in an attempt to find a compromise.

Bitterness set in at a European Parliament meeting ahead of joint talks with ministers in Brussels.

Richard Ashworth, leader of the UK's Conservative MEPs, said he had made clear that not all MEPs backed the 6.8% rise, telling Parliament President Martin Schulz that he was "completely out of touch with political reality" at a time of painful national budget cuts.

The meeting had become acrimonious - and then Mr Clark renewed the fight this afternoon when ministers began negotiations with the Parliament and Commission.

The UK was making budget cuts of nearly 20% in almost all departments, said Mr Clark. IMF forecasts suggested national government spending across the EU was falling by more than 8% between 2010 and 2012.

With that in mind "most people around this table should recognise the need to reduce rather than increase budgets", Mr Clark said.

He said the Commission itself had reduced its growth forecasts for this year and next, and called for "sound public finances" to restore confidence essential for growth.

Mr Clark went on: "So it is frankly breathtaking that, knowing all that, the Commission does not practice what it preaches by proposing reductions, but instead asks for a 6.8% increase in this budget over last year.

"And an extra 9 billion euro (£7.2 billion) for 2012 - the equivalent of a 9.5% increase on the 2011 budget."

He insisted: "Europe must practice the fiscal discipline that it demands of member states.

"Ordinary working people, whether in the UK or elsewhere, cannot be asked to pay more to Europe when they are enduring cuts at home."

The Commission insists it needs the full rise to cover EU projects already signed off by national governments. But officials said the proposed budget included "tough" decisions on savings, including a 1% cut in the Commission's workforce, and an effective freeze in administration costs.

The UK and seven other EU countries - France, Germany, Sweden, Finland, Denmark, Austria and the Netherlands - signed a joint statement in July saying even a 2.79% rise was "more than we would have liked".

And Mr Clark warned this afternoon that, the bigger the increase in next year's budget, the lower the chance of any deal at all when EU leaders sit down in a fortnight to thrash out the contentious seven-year spending programme.

The budget talks broke up tonight without agreement - leaving a deadline of the end of November 13 for a final deal.

The UK, France, Germany, Sweden and the Netherlands stuck firm on refusing to offer a euro above a 2.79% increase for next year.

And a last minute Commission declaration that it could get by on an extra eight billion euro (£6.4 billion) from the member states for this year instead of nine billion euro (£7.2 billion) only worsened the mood.

"The Commission suddenly decided it needed one billion euro less than it had previously insisted was the required amount to meet a shortfall this year... and that soured things." said one EU official.

"The ministers decided to leave it for now and there'll be more consultations by phone over the next few days."

The issue is now likely to end up on the table for talks between EU finance ministers in Brussels on Tuesday, with just hours before the deadline expires.

If no deal can be done, this year's spending level is "rolled over" into next year, with no increase at all.