JEAN-CLAUDE JUNCKER dangled budgetary carrots before Britain’s allies last night in his attempt to push through a deal by isolating Tony Blair.

The Prime Minister of Luxembourg, who is the current EU President, concentrated his fire on Jan Peter Balkenende, the Dutch Prime Minister, whose countrymen, at €180 per head, are the largest individual contributors to the EU’s annual €100 billion budget.

With growing resentment among the Dutch public at the cost of their European bill, Mr Juncker offered to slice €460 million off their annual contributions this week. Last night, a new offer of €730 million was tabled in a private meeting between the two prime ministers.

The savings to the Dutch Treasury would come by halving the amount of value added tax receipts the Netherlands would hand over to Brussels and allowing it to keep up to half the customs duties it levies on imports entering the Union via Rotterdam.

The figure, however, is still below the €1 billion the Dutch Government is looking for and the €1.5 billion the Opposition is demanding. At the same time, the prospect of preferential treatment for their northern neighbours prompted Belgium to demand similar treatment for the port of Antwerp. Mr Juncker attempted to woo Sweden, one of Britain’s strongest allies and which provides €117 per capita towards the annual cost of EU policies, by offering the same VAT and customs duties concessions as were being proffered to The Hague.

He also made a gesture towards Germany - the Union’s most important paymaster, providing more than one fifth of Union expenditure - by proposing to reduce by half the country’s VAT bill to the EU budget. The Luxembourg leader was also determined to win support from large countries such as Spain and Italy. Both fear that the combination of new EU members and a tight multiannual budget programme will cut off the flow of funds they have enjoyed in recent years. He has proposed special phasing-out measures for Spain, aid to the Canaries and help for Italy to tackle unemployment.

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