The threat to European Union agriculture subsidies posed by negotiations for a 2007-13 medium-term EU budget appears to be receding, with the union's UK presidency backing away from demanding tough cuts.

Instead, prime minister Tony Blair has flown to eastern Europe capitals to persuade their governments to accept cuts to regional aid payments, for which they would have been likely recipients.

A UK government spokesman has confirmed that Britain will propose a budget representing 1.03% of EU GNP, down from 1.14% proposed by the European Commission and 1.06% tabled by the previous Luxembourg presidency. Britain will also offer to cut its much-criticised EU budget rebate.