Europe's finance ministers give ground on UK concerns over hedge fund curbs

Against British wishes, finance ministers meeting in Brussels approved a crackdown on the high-risk sector in the wake of the economic crash.

But in a major concession, they agreed that negotiations on the final deal which now starts with the European Parliament will take account of UK concerns.

It was as much as the new Chancellor could have wrung from a deal already in mid-discussion with his predecessor when the General Election intervened.

A few days ago Mr Osborne played down expectations, making clear he was prepared to lose the argument and keep his powder dry for other EU battles.

Yesterday a spokesman said: "We have reached a political agreement. It is a very good result in the circumstances, the best outcome we could have expected."

He went on: "When negotiations with the European Parliament start, the UK's views will be fully taken into account".

Mr Osborne used his first Brussels meeting to call for a cash freeze in the EU budget – warning that a proposed six per cent rise was unacceptable.

He said national budgets were facing belt-tightening and if the Commission's planned increase was approved, including a 4.5 per cent rise in EU administration costs alone, it would mean a 600m increase in the UK's gross contribution to the EU kitty.

At a Press conference before returning to London, Mr Osborne said: "We had a lively discussion on the proposal for the 2011 EU budget, for which the Commission has proposed a six per cent increase, including a 4.5 per cent increase in administration costs.

"I was not alone in saying that this is unacceptable. Many countries are accepting public spending restraints and for the UK, if passed, this EU budget rise would mean a 600m increase in our gross contribution to the EU.

"Others said so too. I am glad that has been noted at this early stage "

But he insisted he had not "banged the table" on the EU budget or anything else.

"I tried to demonstrate today the new constructive, engaged approach to discussions in the European Union. I will support British interests but I'm also interested in making sure the European economy grows and deals with some of its fiscal problems."