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Britain and other European Union countries put their weight behind Franco-German calls for tougher eurozone rules at a summit today (29 October), agreeing on "limited" changes to the EU's main treaty in return for a cap on the EU budget.

Officials struggled to deliver the message that legal tricks could accommodate both Germany's push for treaty change and conflicting calls from several other countries which had rejected the idea. Regarding treaty change, the key word is "simplified", officials explained. A simplified provision, enshrined in Article 48, Section 6 of the Lisbon Treaty, allows member countries to unanimously adopt a decision amending all or part of the main elements of the Treaty on the Functioning of the EU (TFEU), which governs how the Union carries out its work. Such a procedure would avoid the need to call a constitutional convention, experts explained. In addition, the European Parliament would only be "consulted" instead of enjoying full voting rights as part of the normal co-decision procedure. The changes to the treaty are to be settled by mid-2013, before the expiry of the present emergency fund agreed earlier this year to deal with crises such as the one that hit Greece. The objective is to replace that with a permanent mechanism. The simplified treaty change procedure will not enter into force until it is approved by member states in accordance with their constitutions. Most EU countries are expected to ratify the decision by a simplified procedure in their parliaments. As for Ireland, it remains unclear whether a change effected in this way would require another referendum.

UK Prime Minister David Cameron appears to have been instrumental in forging a deal, lending his backing to Franco-German calls for treaty change in return for keeping a lid on the EU's 2011 budget. 11 member states, including Britain, France and Germany, will send a letter to the European Commission and Parliament today saying that their plans to increase the EU budget by 5.9% in 2011 are "especially unacceptable at a time when we are having to take difficult decisions at national level to control public expenditure". The letter was signed by the leaders of the UK, Germany, France, the Netherlands, Sweden, the Czech Republic, Denmark, Austria, Finland, Slovenia and Estonia. The bloc's finance ministers had earlier voted for a limited increase in the EU budget of 2.9%. "We are clear that we cannot accept any more than the 2.9% increase proposed by the finance ministers," the leaders say in the letter. Cameron argued that a planned increase in the EU budget would cost his country's taxpayers the equivalent of one billion euros. The 2.9% rise would still cost them £435m (500m euros). Parliament to fight back By agreeing to cap the budget, EU leaders set themselves on a collision course with the European parliament, which has the power to approve or reject the proposed budget. Negotiations between the European Parliament and the Council, which represents the 27 member countries, over the EU's 2011 budget kicked off on 27 October (see 'Background'). "If Cameron is prepared to give up the British rebate [...] then we can for sure discuss a reduction of the budget," said Martin Schulz, leader of the Socialist & Democrats group in the European Parliament, speaking to EUX.TV, the European policy news channel powered by EurActiv. "The European budget is not to be compared with national budgets," said Schulz. "There are no own resources. We have no European taxes. We have no own money. It is money coming from the member states. We can make no debts. The British budget must be reduced because there is enormous debt. Europe has no debts," he said.

The European Commission has announced reform proposals for the EU's common agriculture policy (CAP), emphasizing the need for greater environmental protection with less divergence in payments between 'old' and 'new' member states. The non-legislative plans, which contain three options ranging from a limited to a more radical overhaul of the CAP, also call for an upper limit on the size of direct payments to individual farms.

Environmental groups broadly welcomed the greener focus, but cautioned that meaningful improvement would depend on the detail of concrete legislative proposals, expected from the commission in mid-2011. "The test of whether this is a breakthrough in farm subsidy support or mere window dressing will be whether environmental eligibility criteria are set at a higher level than what good agricultural practice says farmers should be doing anyway," said Tony Long, director of WWF's European Policy Office. Some groups reacted angrily to the proposals, including the EU farmers' union, Copa-Cogeca. "The only concrete proposal in the paper is to add more costly burdens onto EU farmers," said the group's president, Padraig Walshe.

The European Parliament, which has an equal say with member states in approving the final agreement, was supportive of Thursday's document, but recognised the real fight over the CAP's future shape has yet to come. "Clearly this is only the second step along what will be a very difficult road," said Scottish liberal MEP George Lyon who drafted a report outlining parliament's own views on the policy. "The real threat of big budget cuts still hangs over the whole policy debate, and the final decision on the budget will have a profound impact on the final outcome," he added.

Poland's top farm official has slated the EU's agricultural policy, or CAP, as "two-speed" and common "only in name," calling for a new system with reduced direct payments for farmers and increased money to help restructure the sector. Speaking to journalists on Monday (8 November), Marek Sawicki from Poland's conservative Peasant Party also threw his support behind one option outlined in next week's European Commission proposal on CAP reform, and slammed the contents of a recent Franco-German position paper as purely "cosmetic."

Direct payments for farmers in newer member states are strongly linked to farm size, while those in the EU15 countries receive funds calculated using a complicated system that takes into account historic stock or crop levels. This has resulted in huge variations in direct payment sizes, with per-hectare payments for Polish farmers amounting to roughly €150, compared with while €300 for French farmers.

"It is no secret that at the moment we have two speeds in Europe. There are old and new member states and they move at different speeds," he added. "There's 27 different common agricultural policies, but only the name is common." To balance this out, Mr Sawicki wants direct payments for farmers in all member states to be reduced in size, while EU funding under the policy's 'rural development' pillar should be increased. Payments for Polish farmers are already split roughly evenly between the two funding channels.

The European Commission has today published a Communication on "the Common Agricultural Policy (CAP) towards 2020 – Meeting the food, natural resources and territorial challenges of the future". The reform aims at making the European agriculture sector more dynamic, competitive, and effective in responding to the Europe 2020 vision of stimulating sustainable growth, smart growth and inclusive growth. The paper outlines three options for further reform. Following discussion of these ideas, the Commission will present formal legislative proposals in mid-2011

British Prime Minister David Cameron is pressing EU leaders in the margins of a European Summit in Brussels on Thursday (16 December) to support a declaration on limiting the size of the EU's future multi-annual budget (post 2013), diplomats have indicated. Although the budgetary issue is not formally on the summit's agenda, the UK leader is hoping to garner the support of enough member states in order to publish a letter later today or on Friday.

Mr Cameron is under pressure from elements of his own Conservative Party to limit future EU spending, especially as national governments implement thumping austerity packages back home. London recently lost its battle to freeze spending in next year's annual EU budget which is decided by majority voting among member states, unlike the long-term framework which needs unanimity.

A tie-up between the size of the future EU budget, Britain's EU budgetary rebate and funding for the common agricultural policy (CAP) is one deal rumoured to be under discussion between France and the UK. France is adamant that CAP funding should not be cut. Poland has been the leading opponent of attempts to limit the size of the multi-annual framework which is then subsequently broken down into annual spending plans. "What is the most important from our point of view is for the budget not to be reduced significantly, because we believe the funds flowing to Poland and other countries help us fight the crisis," Polish Prime Minister Donald Tusk told reporters hours before the summit.

Since it came to power in July this year, the Slovak centre-right government has called for private investors to feel the pain of any rescue operation under the eurozone umbrella. It considers the Greek bail-out "essentially a mistake" and a "precedent" that made European governments a "hostage" of financial markets. "If we continue this way, we are close to a pyramid scheme," the Slovak prime minister, Iveta Radicova, told journalists after the Wednesday government session dealing mainly with Ireland (24 November). She warned that a system of accumulating debts eventually risked falling like "a house made of cards". "Once again, taxpayers are expected to pay the bill. Once again, the banks are being rescued," Ms Radicova said, hinting that Lisbon and Madrid could be next going cap in hand to their EU colleagues.