UK rebate to cloud Finnish presidency

The Finnish presidency will have to sort out a dispute between the UK and the rest of the EU member states over the size of the British budget rebate as a leftover from the Austrian presidency.

One of the last tasks of the Austrian presidency was to reach agreement on how the UK's rebate would be applied to spending from the 2007-13 budget, following the deal struck by EU leaders last December.

In December UK Prime Minister Tony Blair insisted on keeping the rebate but offered to cut it so that it was worth €10.5 billion less over the seven years than if it had not been reformed.

But the UK is arguing that its rebate should be calculated after special deals to reduce the net contributions of four wealthy countries have been budgeted for, so that these sweeteners would not reduce its rebate.

Sweden and the Netherlands received lump sum reductions on their annual net contributions while Germany and Austria got cuts in the proportion of value-added tax receipts they have to pass to Brussels.

A diplomat said that the UK was lined up against 24 other member states in discussions in the Council of Ministers and commented that the UK had had the chance to object to the usual methodology used in calculating the rebate in a meeting of ambassadors held in the week after the European Council but had failed to do so.

The Finns will have to deal with the issue, but EU officials say that an agreement to revise the rules on own resources based on the December agreement does not have to come into force until 2009. A deal would have to be ratified by national parliaments which would take around a year.

A UK government spokesman said that the issue was "part of technical discussions" which were needed to make sure that the deal "reflected what was agreed in December". He added that there was "no question" that the UK would not be paying its full share, pointing out that Britain's net contribution would be the same as that of similarly-sized countries such as France and Italy.

The Finnish presidency will have to sort out a dispute between the UK and the rest of the EU member states over the size of the British budget rebate as a leftover from the Austrian presidency.

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