EU must cut its own budget too, says Vince Cable

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He told MEPs, who are expected to push for an increase of at least 6% in spending next year, that Britain expects to see discipline in the use of EU taxpayers' money at a time when the European Commission is demanding greater scrutiny of countries' finances.

EU finance ministers have already reduced an EC proposal for a 6% rise next year to 2.9%, with Chancellor George Osborne outvoted in demanding a spending freeze.

But MEPs are likely to throw down the gauntlet by reinstating higher spending plans in November - something Cable insisted would go down badly with taxpayers across the Continent.

He also signalled a tough government stand in forthcoming negotiations on the future of Britain's EU budget rebate, and on any effort to remove the Government's opt-out from the EU's 48-hour maximum working week.

But Cable also insisted that the coalition Government was "positively engaged" on free trade, an end to protectionism and flexible labour markets as the basis for restoring jobs and growth across Europe.

"I am anxious that these issues should not be drowned out by a row over the European budget," he said.

"But I have to sound the alarm here: at a time when national governments, including mine, are having to make very painful cuts in public spending, no one can understand why the European budget is not being subjected to the same discipline.

"There is a big backlash on the way, not only in the UK."

He urged MEPs: "Can I plead with you to tackle this issue sensibly? Any sense that the European Parliament and European Commission are not acutely sensitive to this issue will be seriously damaging."