EC ministers cut budget

BOWING to pressure from their national budgets, European Community ministers voted last night for a cut in the EC's 63bn ecu ( pounds 44bn) annual budget.

The decision is likely to give satisfaction to governments all over Europe, but particularly in Germany and in Britain, which are trying to contain spending demands at home. Of special concern to the political climate in London, it is likely to give strength to the Treasury in its struggle against the demands from spending ministries for more money.

It also sends a signal from the Community's richer members about their view of the debate, taking place in parallel with the discussion on 1993 spending, over the EC's five-year spending plans. Jacques Delors, the President of the European Commission, has proposed an increase by 1997 of about one-third in real terms, which the EC's heads of government failed to endorse at the Lisbon summit late last month.

At around 123m ecu, the spending cut is largely symbolic: it represents less than a fifth of one per cent of the EC's total spending this year. It is likely to be seen as a red rag by bulls in the European Parliament, which is due to vote on the budget later this year. The parliament has consistently complained that even the Commission's spending proposals are too low.

The element of yesterday's decision that is most likely to inflame the parliament will be the fact that the ministers failed to agree a firm figure for the Cohesion Fund, a programme of aid for Spain, Portugal, Greece and Ireland. The Socialist-dominated parliament had backed the EC's four poorest members in their quest.

As a sign of their disapproval, the four voted against the budget in yesterday's Council of Ministers meeting - in the full knowledge that because the decision was to be taken by the qualified majority voting system, their opposition would not prevent the budget from passing through the Council.

An Irish minister said afterwards that they had voted against the budget because they wanted to make sure 'the Maastricht commitments on cohesion and the decisions of the recent Lisbon summit are honoured fully'.

Sir John Cope, chairing the meeting on behalf of the British presidency, was quick to draw a wider moral for the future financing debate. He pointed out that the 1993 draft budget amounted to less than 1.1 per cent of the combined national products of the EC's members. An important part of the Delors proposals - hotly opposed by Britain - has been to increase the budget ceiling from 1.2 to 1.37 per cent.