UK welcomes EU 2012 budget deal

19 November 2011 Last updated at 12:07 ET

The spending plans are paid for by national EU budget contributions

The government says it has helped secure an "excellent deal for the UK" following its negotiations over the 2012 EU budget.

The spending plans were set at an inflation-only rise of 2% to 129bn euros (£110bn) after 15 hours of talks.

Euro-MPs and the European Commission wanted more than double the increase.

But they were defeated by governments including the UK, which insisted they would not allow EU rises while imposing national spending cuts.

Euro-MPs had demanded a 5.2% budget rise arguing EU policy spending - most of which is redistributed in the member states in grants and subsidies - can take up the slack of national budget cuts in many areas.

Last month, Europe minister David Lidington called the proposed rise in the long-term budget "astonishing" and Prime Minister David Cameron has also said hard-pressed Britons would not understand anything above an inflation-only rise in euro spending in the foreseeable future.

An 11% rise would, according to Treasury estimates, add an extra £1.4bn (164bn euros) a year between 2012 and 2020 to the UK's contributions to the EU budget.

The only concession - which the UK voted against - to the Commission and MEPs was an "amendment" to the 2011 budget to make available up to 200m euros (£170m) extra.

EU Budget Commissioner Januz Lewandowski said the agreed deal was "clearly an austerity budget" and warned Brussels may not have enough money to meet all its financial commitment to recipients of its funds next year.

'Inflation-busting proposals'

No deal on the long-term budget is likely before the end of next year, but British ministers anxious to put down an early marker of belt-tightening are now buoyed by the 2012 budget result.

Financial Secretary to the Treasury Mark Hoban, representing the UK at the negotiations, said the decision was a victory.

"We have stopped the European Commission and European Parliament's inflation-busting proposals and have delivered on the government's promise to freeze the EU budget in real terms," he said.

"Throughout this process, we have argued that, with member states facing tough decisions on spending at home, we could not afford these unrealistic demands.

"This settlement is far below the 5.2% the European Parliament wanted and the 4.9% proposed by the Commission. It is also 12bn euros (£10.3bn) less than the maximum ceiling agreed in 2005."

He added: "We will also be fighting hard with like-minded member states against unaffordable rises in the next seven-year budget."

But UKIP leader Nigel Farage said the government was "dressing a defeat up as a victory".

"Time and time again this government has promised that it will fight EU budget increases. Time and time again we are told that a reverse is victory.

"This 2.2% increase equates for Britain an increase in our contributions to Brussels of £350m (409m euros). Will Mr Cameron tell us which services he is planning to cut to make up the shortfall - will the NHS be hit, will it be education, will it be policing?"