Foot-and-mouth disease and BSE will cost European taxpayers #2.4 billion (£1.9 billion) in the coming year, the EU's Budget Commissioner announced yesterday. Unveiling EU budget proposals for 2002, Ms Michaela Schreyer said the two crises in agriculture would push up farm spending by 5 per cent to #46.2 billion.

Agriculture will account for 46 per cent of total EU spending.

"We have had two major crises which we have had to deal with - BSE and foot-and-mouth disease - and they will have an impact on next year's budget," Ms Schreyer said.

An emergency plan proposed earlier this year by the Agriculture Commissioner, Mr Franz Fischler, to rescue the beef industry will cost an estimated #1.145 billion next year - #420 million has been put aside for veterinary measures and #250 million for compensation to farmers affected by the foot-and-mouth crisis.

Ms Schreyer said a further #1 billion was being put aside for spending on animal diseases.

"With this reserve of #1 billion we are moving on the safe side," she said.

Rural development will account for #4.6 billion but Ms Schreyer said she expected savings from the sugar regime of #300 million, while the sheep sector would cut costs by #265 million.

The proposed spending falls within the limits imposed by Agenda 2000, an agreement that sets out EU spending until 2006.

The Commission is proposing to spend a total of #97.7 billion next year, with farm spending accounting for the largest share, followed by structural funds. The EU spent #7.5 billion less than expected last year so some of the Union's net contributors will receive a rebate. Germany, the largest net contributor, will receive almost #1.8 billion.

Administration costs will rise by 5 per cent to #5.15 billion but will still account for less than 6 per cent of the total EU budget. External spending - on projects such as the reconstruction of the Balkans - will fall by 2.4 per cent.

Research and technological development, environmental programmes and an information campaign on the euro will receive more funding. And #7.5 million has been set aside to set up a European Food Agency.

The budget must be approved by the 15 EU finance ministers and it is not certain they will agree to increase spending by the 4.8 per cent the Commission wants.