MEPs in Strasbourg yesterday overwhelmingly rejected the seven-year budget deal reached by the 27 member states last February, demanding further negotiations with the Council to introduce more flexibility.

They are insisting on a legal review which could reverse the cuts

Adopting a resolution with 506 votes to 181, MEPs are asking for the possibility of a mid-term review after the 2014 elections and more flexibility in the way to channel unspent funds.

Sources close to the EP told The Times that although the vote may delay the final technicalities of the €960 billion deal, it is not expected to have any effect on the spending limits and individual packages negotiated with member states.

During last February’s negotiations, led by Malta’s former Prime Minister Lawrence Gonzi, Malta managed to conclude a lucrative deal, acquiring €1128 million in EU funds for the seven-year period starting from 2014.

While MEPs did not challenge the overall spending limit agreed by governments, they are insisting on a legal review which could reverse the cuts made if the EU’s economy were to improve in the meantime.

For the first time since the inception of the EU, heads of state and governments last month agreed to reduce their national contributions to the EU coffers over the seven-year period to reflect the austerity measures introduced in many member states.

Although Malta was at first against massive cuts, it had to go along with the overall negotiations. However, its negotiators still managed to come back with a favourable deal. The EP and the Council will now start informal negotiations aimed at reaching some kind of compromise.

If governments and the parliament fail to reach a deal, the EU would be without a spending framework from the start of next year, forcing it into a system of provisional annual budgets and throwing its long-term spending plans into disarray.