A leading left-of-centre thinktank is calling on Downing Street to negotiate a "grand bargain" with its European partners in which Britain would abandon its multibillion-pound EU rebate in exchange for a 25% cut in the budget. The Institute for Public Policy Research says the 25% cut, which would see the budget reduced from £120bn to £89bn, would save Britain £1.2bn from its £12.8bn contribution. This would neutralise any loss from ending Britain's EU rebate.Will Straw, associate director of the IPPR, said: "Britain should attempt a 'grand bargain' with Europe, offering to give up the rebate, but only in return for a smaller overall budget, meaningful reform of the CAP [Common Agricultural Policy], and greater measures to enhance growth. To ensure that giving up the rebate is palatable to the British public, it should be contingent on a reduction in the overall size of the budget so that Britain's contribution to the EU becomes smaller than it is today."