Counties in the border, midland and west (BMW) regions may be facing a severe cut-back in European Union funding unless European governments increase their contributions to the EU's budget, it was claimed yesterday.

EU Budget Commissioner Ms Michaele Schreyer described as "unrealistic" the proposal - made by the EU's six richest member-states - to cap EU spending at 1 per cent of GNP of the entire EU.

Imposing the cap would mean "it would not be possible to finance further structural funds to the current member-states". The BMW counties are the main Irish beneficiaries of these funds.

In addition, recent agreement on the reform of agricultural supports would have to be reopened, and "this would, of course, be a problem for Ireland".

Ms Schreyer, who will publish the EU's long-awaited spending plan for 2007-2013 on Tuesday, said: "I am pleading for you to be realistic I regret that these member-states, who signed the letter pleading for 1 per cent in the future, didn't take a reality check."

While the EU had achieved a budget of 0.98 per cent of GNP this year, she said, "this cannot be the benchmark" as it was the lowest allocation proportionately in 15 years. Planned spending for 2004 was already running €11 billion over budget.

Without an increase in contributions, she said, the EU would not be able to afford planned bridging finance for regions that no longer qualified for structural funds.

"In the current member-states, there should be something for the regions that they can keep their potential and not be confronted with sudden, very hard cuts in their supports."

Speaking in Dublin, where she held an informal meeting with officials from the European Parliament, Council of Ministers and Commission, Ms Schreyer said enlargement posed "huge difficulties in economic terms". The EU's population is to increase by 28 per cent but cross-national income by just 6 per cent.

While she said she could not predict when the Republic would become a net contributor to the budget, it was "on the edge" of doing so. Ireland was already "exceptional" for being the only net beneficiary with an average income above the EU average.

In 2002, the State enjoyed a net benefit of €1.5 billion from the EU. This year, it will pay just €21 million to the budget.

In adjusting to the new scenario, Ms Schreyer urged Irish people to keep in mind the "solidarity" shown to them in the past and the need to return the favour to the citizens of new member-states. She added that the phasing out of structural funds to Ireland would ultimately occur with or without enlargement because of the State's growing prosperity.