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The UK may be prepared to give up between 12% and 15% of its annual £3.8bn EU rebate, Downing Street has signalled.
The prime minister is expected to offer a reduction in return for cuts to spending on agriculture, in an effort to end the EU's budget crisis.
The rebate is on course to rise significantly after 2007, because net contributors to the EU budget will soon have to start paying more, to cover the growing cost of EU enlargement.
But the European Commission says the UK "will be largely shielded from the extra cost" because of the rebate.
It says that under its proposals for the 2007-13 budget - now the subject of heated debate - the rebate would average about 8bn euros per year.