Prime Minister Lawrence Gonzi yesterday said that a possible plan by the UK aimed at cutting the EU's budget between 2007-2013 would certainly raise concern among the new member states.

But, contrary to some other European leaders, Dr Gonzi preferred to take a "wait and see" approach, saying he would rather first analyse in detail what was being cooked up by the British presidency.

The UK is expected to suggest slashing the EU budget by €25 billion via a 10 per cent cut in regional aid to the 10 new EU states and reduce rural development funds in an attempt to end the deadlock over EU spending.

British Prime Minister Tony Blair, who, as EU president is charged with negotiating a deal on a new EU budget, has said the UK would not relinquish its rebate from EU coffers without serious reform of the bloc's farm subsidies.

In the meantime, France once again called on the UK to cut its contested rebate to try and secure a deal at an EU summit in mid-December.

Dr Gonzi told The Times he had explained Malta's position and fiscal parameters during his meeting with Mr Blair in Malta last week.

"Certainly, there are aspects within the EU budget which need to be reformed but, ultimately, this is a hugely complicated affair," he said.

At the end of the Commonwealth Heads of Government Meeting in Malta last weekend, Commonwealth secretary general Don McKinnon lashed out at EU countries that are reluctant to phase out agricultural subsidies enjoyed by its members and create a fairer trading environment.

Dr Gonzi was less committal on Malta's position, saying he would like to see reforms in the EU's agricultural policy but the whole issue was related to the reform of the EU budget.

The current British plan is likely to be rejected by most of the 10 countries that joined the EU last year and which are against any cuts to the EU's structural and cohesion funds, the economic aid earmarked for the bloc's poorer members.

The European Commission has warned that failure to agree on the budget would plunge the EU deeper into crisis, with the bloc still paralysed after France and the Netherlands rejected its draft Constitution.

Hungary's Prime Minister, Ferenc Gyurcsany, said that although the EU budget spat was due to the inability of the UK and France to work out their differences on agricultural funding, the easiest solution to achieve reforms was to "ram them down the throats of the new EU members".

Mr Blair is expected to meet the leaders of Estonia, Latvia and Lithuania tomorrow and those of Hungary, Poland, the Czech Republic and Slovakia on Friday for budget talks.

British Foreign Secretary Jack Straw is to put detailed budget proposals to other EU foreign ministers next week.

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