Leading article: The forfeiting of goodwill

If the test of an effective compromise is that all the parties hate it, then Tony Blair is off to a good start with his proposed EU budget agreement. Almost everybody from "old" to "new" Europe has come out to say how completely they reject it.

The deal was "unacceptable" said the Prime Minister of Britain's former close supporter Poland yesterday. It was a budget for "a mini-Europe and not the Europe we need", scoffed Blair's old ally Jose Manuel Barroso, the European Commission president, while the French and Germans - who stand to gain most from the UK deal - dismissed it as having little chance of success.

It is not as bad as that. Britain's proposals, as outlined on Monday by the Foreign Secretary, Jack Straw, are carefully judged to give something to everyone and most to those, like France, who count for most. Britain is to give up part of its rebate over the period 2007 to 2013, but it will be against an overall reduction in the EU budget. The new member countries of eastern Europe will be asked to sacrifice some of their assistance but will find it easier to get it. Germany and the Netherlands, the chief complainants about the existing budget, will gain moderately reduced contributions. There will be cuts in the rural development schemes but not, all importantly, to the Common Agricultural Policy, despite the Chancellor's railings against it.

Will it work to give Britain a budget deal in time for the summit in eight days, shortly before its presidency ends? Possibly. If it is not enough to gain the enthusiastic endorsement of Britain's European partners, it may be sufficient to gain their reluctant agreement. Tony Blair's problems could lie less in the details of the deal he proposes than the fact that there is no absolute need for member states to agree a budget in his presidency. Some could prefer to kick and scream into Austria's presidency in the first half of next year even if they do not achieve a much better agreement, while President Chirac is in no mood to give the British Prime Minister even the time of day at present.

That is the real misjudgement of Tony Blair in his handling of his presidency. He started the term with the huge opportunity posed by the French and Dutch rejection of the new constitution. He has ended it embroiled in a haggle over financial details in which he has lost much of the goodwill that he once possessed, particularly among the newer members, with an offer that should, and could, have been made right at the beginning. A messy last-minute deal is the usual fate of EU budget discussions. If Mr Blair succeeds over the next week he will have shown his negotiating skills. But it could, and should, have been so much more than that.