UPDATE 1-States’ budget freeze bid risks more EU wrangling

* Germany, France, UK, others urge freeze from 2013

* May spark funding battle with eastern EU members

(Recasts, add background)

PARIS, Dec 18 (BestGrowthStock) – Five countries said on Saturday
the EU’s budget should be frozen until 2020, highlighting a new
source of policy divisions that could spark a funding battle
between the region’s western states and their poorer peers in
the east.

Britain, France, Germany, Finland and the Netherlands — all
net contributors to EU coffers — said in a joint letter that
increases in the bloc’s communal long-term budget should not
exceed the rate of inflation after 2013.

“European public spending can not be exempted from member
states’ considerable efforts to get their public spending under
control,” the letter, addressed to European Commission President
Jose Manuel Barroso and released by the French presidency, said.

British Prime Minister David Cameron had flagged the call
for a budget freeze at a news conference on Friday following an
EU summit that, while paving the way for a permanent euro zone
financial rescue scheme, pointed up lingering deep internal
divisions over how best to tackle the region’s debt crisis.
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The five states can expect strong opposition from Poland and
other emerging European countries when talks between the EU’s 27
governments on the next long-term budget, which runs from 2014
until at least 2020, get under way in mid-2011.

‘NO CUTS IN AID’

Polish Prime Minister Donald Tusk said his country, which
along with others like Bulgaria and Romania receive aid to help
modernise their regions, would resist funding cuts.

“What is the most important from our point of view is for
the budget not to be reduced significantly, because we believe
the funds flowing to Poland and other countries help us fight
the crisis,” Tusk said on Thursday.

While the views of all EU states carry the same weight in
deciding long-term budgets, a minority of net contributors
managed to push through a similar initiative the last time the
funding came up for negotiation in 2005.

Handouts in the 2014-2020 period might need to be spread
more thinly if as anticipated the EU takes in new members from
the western Balkans, but Tusk took cheer from the fact that
despite Cameron’s efforts, the summit’s conclusions did not make
any reference to budget cuts.

One diplomat said Britain has scaled down its demands as it
initially wanted to trim the budget to 0.85 percent of the
bloc’s output, compared with the current 1 percent.

Next year’s budget is worth 126.5 billion euros, with more
than 40 percent of it going on agriculture and a third on aid to
poor regions.

The joint letter was signed by French President Nicolas
Sarkozy, German Chancellor Angela Merkel, British Prime Minister
David Cameron, Dutch Prime Minister Mark Rutte and Finnish Prime
Minister Mari Kiviniemi.

(Reporting by Leigh Thomas; writing by John Stonestreet;
Editing by Marcin Grajewski)

UPDATE 1-States’ budget freeze bid risks more EU wrangling