Blair faces battle to keep £2bn EU rebate

The row over Britain's future in Europe escalated today amid a bitter cash wrangle.

Officials in Brussels want British taxpayers to pay up to £2 billion a year more for EU membership.

Tony Blair is facing a battle to block the move, which follows grumbling from less well-off member states. The huge hike in fees would provide ammunition for anti-European campaigners and deliver a potentially fatal blow to his chances of winning a referendum on the EU Constitution. The row focuses on the £2 billion rebate Britain receives to make up for massive distortions in EU spending.

If it is withdrawn, Britain would become the biggest contributor to the EU's E100 billiona-year budget, paying 0.51 per cent of its GDP compared with France's 0.33 per cent.