Throughout his time as prime minister Tony Blair has been dogged by the accusation that he is a soft touch when it comes to hard bargaining. Sir Christopher Meyer, the former ambassador to Washington, recounted how Mr Blair failed to use his leverage in dealing with the White House over Iraq. Instead he was seduced “by the proximity and glamour of American power”. The longer he has been in office the softer he seems to get, caving in to the public sector unions on pensions and his own backbenchers on a range of domestic reforms.

In the early hours of yesterday he returned from Brussels clutching a piece of paper that represents his deal on the European Union budget. When the French start praising Tony Blair’s negotiating stance you know something is wrong. According to Jacques Chirac, the French president, the prime minister had made a “legitimate but politically difficult” gesture. Philippe Douste-Blazy, the French foreign minister, was a harsh critic of Britain’s budget proposals in the run-up to the Brussels summit. After Britain’s concessions he praised Mr Blair for risking a political battle at home to put the interests of Europe first.

The prime minister deserves and will get criticism for his Brussels cave-in, although David Cameron’s newly consensual Conservatives appeared yesterday to be muted in their disapproval. As with all Mr Blair’s deals, there are two problems. The first is the deal itself; the second is the way he got to it. Taken together, the two add up to incompetence on a grand scale.

Three years ago Mr Blair allowed himself to be ambushed by Messrs Chirac and Schröder, the then German chancellor, over the common agricultural policy budget for the period to 2013. Since French farmers receive 22% of CAP handouts, France was understandably keen on the deal which it regarded as set in concrete. Why then did the prime minister allow himself, and British taxpayers, to believe that agreement could be reopened in return for a surrender of part of Britain’s historic EU rebate? Why did he tell business leaders at the CBI conference three weeks ago that the rebate would remain as long as “distortions of expenditure under the CAP” were unreformed?

Nobody would argue with Mr Blair’s sentiments about the wasteful and anachronistic CAP, which is inflicting damage well beyond Europe’s shores. World Trade Organisation talks in Hong Kong are on the brink of collapse because of the inability of Peter Mandelson, the EU trade commissioner, to give ground on agriculture. But why did the prime minister hold out the hope of a rebate-for-CAP reform deal when there was no prospect of him securing it? He is just not that good a negotiator.

The prime minister’s second error was alienating the new EU members in eastern Europe with his pre-summit proposal that spending on them, rather than the CAP, be cut. Yesterday Mr Blair insisted: “We can’t ask the poorer countries of central and eastern Europe to pay the rebate on British spending because that would obviously be wrong.” So why did he first propose a plan that was clearly against their interests? As it is, many fear that new EU spending will go on grandiose projects rather than fostering enterprise and economic independence. Does it really serve our interests for Budapest to have a better Underground system than London, paid for by British taxpayers?

Britain will pay more into the EU, our net contribution rising from £3.5 billion to nearly £6 billion a year. The British rebate has been shaved by £1 billion a year. And for what? Next to nothing. It would have been better for Mr Blair to walk away than agree this deal. He, however, was anxious not be seen as an EU wrecker — that would not be good for his so called “legacy”. Next door in 11 Downing Street, as he watches the prime minister negotiating away Britain’s interests, Gordon Brown is fuming. He is right to be.