Governments reject 5 percent EU budget rise in 2012

BRUSSELS (Reuters) - European Union governments will oppose proposals for a 5 percent increase in the bloc's budget in 2012, instead backing a 2.02 percent rise in line with inflation, EU officials said on Monday.

The agreement underlines the governments' insistence that the bloc's spending plans should reflect national austerity measures, and made it more likely that capitals will oppose similar parliamentary proposals for a rise in the EU's long-term budget for 2014-2020.

"The European Commission's forecast for EU inflation in 2012 is 2 percent, so the proposal by governments is for a freeze in real terms in EU spending," one EU official said.

The 2 percent rise would take EU spending to 129 billion euros ($185 billion) in 2012, another official said.

In April, the Commission said its proposed budget increase for next year was needed to meet pre-existing spending commitments in areas such as regional development funding and scientific research.

But net contributors to the EU budget, such as Britain, described the proposal as unacceptable, and last week Germany estimated that up to 245 billion euros in EU development funding for 2007-2013 has yet to be allocated.

The final budget for 2012 must be agreed jointly by EU governments and lawmakers in the European Parliament, who are expected to call for a bigger rise in EU spending when they vote on the plans in October.

Last year, the legislators initially demanded a 6.2 percent rise in EU spending for 2011, but backed down under pressure from governments to finally agree a spending rise of 2.9 percent.

(Reporting by Charlie Dunmore and Ilona Wissenbach, editing by Rex Merrifield/Ruth Pitchford)