The UK will give up €10.5 billion (£7.1 billion) of its rebate over 2007-13. The overall budget will be €862.4 billion (£583 billion) over the seven years. The new budget is equivalent to 1.045% of the EU’s gross national income.

Where will the money go?

The two biggest items are agriculture, 34% of spending, and regional aid to the new EU members, mainly in eastern Europe, 18%.

What has Britain got in return for giving up part of the rebate won 20 years ago?

The gratitude of other EU members and praise from Jacques Chirac but little else. Tony Blair’s key demand, that any reduction in the rebate would be in return for reform of the common agricultural policy, was rejected.

Why was the extra money needed?

Largely because of the EU’s enlargement to 25 members in May last year.

Who pays?

Britain’s annual net contribution will go up by 63%. This means a rise from £3.5 billion now to nearly £6 billion a year. But officials say the plan will also require increases from France and Italy.

Why has Blair done it?

He accepts that he will get a bad press initially, but needed a deal to show for his presidency.

Will it matter at home?

The Tories and Liberal Democrats are calling it a bad deal; David Cameron is unlikely to come to Blair’s aid on this one.

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