Cameron announces EU budget freeze pact

The UK has joined forces with France and Germany to demand a freeze in the EU budget until the end of the decade, David Cameron has announced.

The three countries will publish a joint text on Saturday setting out their demands.

Mr Cameron said it would put down "a firm marker" and he hoped other countries would sign up to it.

But critics say he should have pushed harder for a cut in the budget and reform of farm subsidies.

Mr Cameron will join forces with German Chancellor Angela Merkel and French President Nicolas Sarkozy to insist the EU's budget should rise by no more than the rate of inflation over the period 2014-20.

'Huge achievement'

Talking up the joint campaign at a Brussels news conference, Mr Cameron said: "You have got a new British government that has taken the initiative on spending, has galvanised other European leaders and is having an impact.

"You are seeing a different (UK) approach that is yielding results."

He added: "I think it is a huge achievement to get the three (UK, France and Germany) together."

But shadow foreign secretary Yvette Cooper said Mr Cameron had "achieved little for Britain".

She added: "The EU budget is still going up by 2.9% this year, and there is no serious plan to get the budget down in future years.

"There is no agreement to even discuss serious reforms on things like the Common Agricultural Policy that could cut the budget."

She accused the prime minister of "desperately trying to appear tough in front of his eurosceptic backbenchers at home, but is failing to appease them. He has offered nothing of substance other than agreeing to give more money to the EU".

UKIP MEP Marta Andreason, former European Commission chief accountant, said: "He is trying to make a success story out of this, but, frankly he should have been asking for a reduction in the EU budget."

She said the UK could have pushed for a 10% reduction, as the EU had underspent over the past five years "by 5% to 15%" and were "asking for much more money than they need".

'Frustrating'

It comes as the 27 EU leaders, meeting in Brussels, agreed to set up a permanent mechanism to bail out any member state whose debt problems threatened the 16-nation eurozone.

The eurozone stability mechanism will require a change to the EU's Lisbon Treaty - but the wording has now been agreed, diplomats say.

EU President Herman Van Rompuy said leaders were ready to do whatever was required to protect the currency.

Britain will be part of the emergency bail out mechanism until 2013 - a situation Mr Cameron described as "frustrating".

But he said: "Britain has secured in black and white a clear and unanimous agreement that from 2013 Britain will not be dragged into bailing out the eurozone. That couldn't be clearer."

The battle over the size of the EU's long-term budget, which covers the period 2014-20, is due to start in the middle of next year.

There is anger among poorer EU countries at the line Britain is pushing in Brussels, which could see aid to them cut.

Polish Prime Minister Donald Tusk said his country would resist any attempt to cut the EU's budget - but Mr Cameron insisted he had a good relationship with the Polish PM.

Some diplomats were also reportedly unhappy that Mr Cameron had chosen a debt crisis summit to focus on the budget.

Mr Cameron also dismissed suggestions he had clinched a deal with Mr Sarkozy which would see Britain back the retention of EU farm subsidies in exchange for the UK keeping its EU rebate won by former prime minister Margaret Thatcher in 1984.

"There is no backroom deal, no secret agreement," he said.

Eurosceptic think tank Open Europe said pushing for a cash freeze rather than reform was a "strategic mistake".

Director Mats Persson said: "Such a deal would serve to antagonise the new member states that stand to lose the most and represent a missed opportunity to re-negotiate the EU's flawed subsidy schemes, at a time when the UK has some leverage."