British Prime Minister Tony Blair warned the poor new east European members on Friday not to miss the boat on a European Union budget deal and the newcomers signalled they could accept a small cut in planned aid.
Seeking a deal on the 2007-2013 budget, Blair put his case bluntly to the leaders of the four biggest new members - Poland, Hungary, the Czech Republic and Slovakia - at a tough meeting in Budapest on Friday.
"If we fail to get the budget deal in December, it is not more likely we will get a budget deal in six months or a year," he told a news conference after the talks.
If there was no deal on future financing under the British EU presidency, which expires on December 31, he told the newcomers: "The consequences of that is that you can end up in two years' time with only a third of the money you need."
He also made clear that Britain was prepared to pay a fair share of the costs of the bloc's historic eastward enlargement, even though he said London's annual rebate would go up, not down, under any deal that left EU farm subsidies unchanged.
Blair's official spokesman said the east Europeans needed to be hard-headed and recognise they faced difficult choices.
"Is it in their interests ... to postpone the possibility of a deal?" he asked.
The talks, which followed a meeting between Blair and prime ministers of the three Baltic states on Thursday, failed to produce a breakthrough, but both sides described them as useful.
"We are still far from agreement today," Hungarian Prime Minister Ferenc Gyurcsany told a news conference. "We want to come to an agreement but not at any price."
Diplomats say the new members reiterated their resistance to a British plan to slash proposed EU aid to the 10 mostly ex-communist newcomers by 10 percent, or about 16 billion euros ($18.85 billion).
But they could agree to a smaller cut, if it was offset by easier access to funding which the mostly former communist nations need to modernise their economies and infrastructure. "I think that Britain might agree on around five percent (cut)," a senior official at the Budapest meeting said.
Polish Prime Minister Kazimierz Marcinkiewicz, whose country stood to lose some 6 billion euros under the initial British ideas, said Poland would not accept "a bad budget" at the December 15-16 summit, but he sounded cautiously optimistic.
"We needed this conversation (with Blair) - it was very tough but very important," he said.
"In my view we are nearing a proposal which is not yet ideal but much better than (Britain's) informal proposal," he told reporters on the plane back from Budapest.
Diplomats said that behind tough public language, some compromise ideas were beginning to gain currency. Britain is due to announce its detailed proposals on Monday.
The central Europeans could for example be allowed to reduce their contribution to the EU budget by the amount that goes towards the funding of the British rebate.
Cuts in rural development spending could be spread to the rich Western members, reducing the hit for the easterners. And Britain is preparing measures to make it easier for accession countries to spend EU money.
EU budget talks ran aground in June after Britain refused any curb on the rebate, worth 5.6 billion euros this year, unless it won a pledge of a future overhaul of farm subsidies, which benefit France most.
Other net paymasters such as Germany, the Netherlands and Sweden want to curb the overall spending level as well as their own contributions in the wake of the EU's historic enlargement last year to ex-communist central Europe.
Blair reiterated Britain would not give up the full rebate without an EU commitment to curtail farm aid that consumes about 40 percent of the budget.
"The rebate on any basis, on any proposal we will accept, will grow, not diminish," he told Sky News television in an interview from Budapest. "But the issue is how does Britain make its contribution to the costs of economic development in the new European countries.
"If we refuse to pay any money to that at all, when we are saying that Germany and France and Italy and all the rest should, well that would be unfair. Now what we are not prepared to do is to pay any more into the Common Agricultural Policy."