BRITAIN'S ANNUAL REBATE from the European Union appears to be under significant threat if this morning's papers are to be believed.
The Financial Times says the prime minister is coming under intense pressure to give up part of Britain's rebate to the EU budget as part of a deal that would see big cuts to European rural subsidies.
The paper says Jean-Claude Juncker, prime minister of Luxembourg, will meet Tony Blair and French president, Jacques Chirac, over the next few days to try to hammer out a compromise deal before the EU summit on June 16-17.The FT claims Luxembourg, which currently holds the EU presidency, knows Blair will only move on the rebate if Chirac agrees to cuts in subsidies for his country's farmers.
Blair will be presented with a draft compromise when he flies to Luxembourg on Tuesday. He is the last of the major European leaders to meet Juncker before the summit.
THE Times says other EU leaders are hoping to put the damaging political setbacks of the draft European constitution’s rejection by the French and Dutch electorate behind them by forcing a showdown with Blair over the seven-year spending plan for the EU worth more than €800 billion (£540 billion).
The paper says the key to any deal for EU expenditure between 2006 and 2013 is the future of Britain’s annual rebate, worth £3 billion. The government has said it will defend the financial arrangement secured by Margaret Thatcher in 1984.
IN OTHER NEWS the Guardian reports Severn Trent, Britain's second-largest listed water company, yesterday reported profits had been hit by a rise in pension contributions.
The paper says the company paid an additional £31.3m in contributions last year and will face further payments over the next two years to tackle a deficit which stood at £309m at the end of March.
The additional payments, coupled with redundancy costs of £13m, left pre-tax profits for the group at £217.3m - down from £254.4m. Profits before interest, goodwill, amortisation and exceptional items were down just £2m at £438.6m.
The Guardian also reports pensions minister, Stephen Timms, suffered the humiliation of angry pensioners booing and shouting yesterday as he tried to convince them they were better off than "any pensioner group in our history". The former Treasury minister was forced to break off his address to the annual pensioners' parliament in Blackpool as hundreds of the 2,000 delegates whistled, shouted and slow hand-clapped.
The minister was defending the government's record at the National Pensioners Convention and in particular its increasing reliance on means-tested benefits.
MENAWHILE THE Telegrapgh reports Alan Greenspan, the chairman of the Federal Reserve, as warning yesterday hedge funds had already picked the "low-hanging fruit" of easy profits and that greater risks lay ahead.
The paper says Greenspan was addressing a bankers' conference in Beijing. And went on to say that hedge funds "should not pose a threat to financial stability" as long as lending banks managed their risk sensibly.Standard & Poor's said on Monday that its hedge fund index had risen 0.29% in May, despite many funds getting burnt by the downgrade of General Motors and Ford bonds.
According to the Telegraph, Greenspan said: "After its recent very rapid advance, the hedge fund industry could temporarily shrink, and many wealthy fund managers and investors could become less wealthy. Continuing efforts to seek above-average returns could create risks for which compensation is inadequate. Significant numbers of trading strategies are already destined to prove disappointing, a point that recent data on the distribution of hedge fund returns seem to be confirming.”
FINALLY the Scotsman says new company formation in Scotland rose during the last quarter at its fastest rate since the beginning of 2003.
The paper cites a quarterly report from the Committee of Scottish Clearing Bankers which says the number of fledgling companies opening accounts at Scotland's four clearing banks jumped 9% during the three months to 31 March.
The total of 5,459 account openings recorded by Royal Bank of Scotland, Bank of Scotland, Clydesdale and Lloyds TSB compared to 5,005 in the last quarter and 5,161 in the first quarter of 2004.IFAonline
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Follows active fee cuts in June