Europe's fat cats facing a leaner winter

The August exodus from the EU nerve-centre is under way, but highly paid Eurocrats face a leaner than usual winter, now that their perks are set to come under the axe.

The belt-tightening drive to monetary union is taking its toll in most member-states but the austerity drive is beginning to bite in Brussels too. A yearly parcel of tax-free drink and a supermarket where only European officials can shop will be the first to go as Commission bosses move to disarm critics of the EU's executive.

The Germans, who claim to pay most of the EU's bills, are impatient for reform. In negotiations on the Amsterdam treaty this year Bonn demanded legal changes to wrest control over EU officials' pay from the Commission. Werner Hoyer minister for European affairs, said the image of the "Euro fat-cat" was partly to blame for public hostility to a single European currency in Germany. Germany's bid failed and the treaty concluded in June contains nothing which undermines the Commission's right to go on setting its own lavish pay-scales.

Conscious of the poor image suffered by the Brussels bureaucracy, Erkki Liikanen, the commissioner in charge of personnel, is preparing for a clamp-down. He plans to target the tax-free drinks and "Economat" supermarket hidden in a basement under Commission offices. He is also understood to have in his sights Eurocrats who live in their home countries but enjoy Brussels-style salaries and a special light tax regime.

Such cases are common in Belgium and Luxembourg, which house the main EU institutions and where many staff are recruited but where local salaries can be abysmal and tax is punitive. In Brussels the greatly resented fonctionnaires are blamed for driving up rents and creating urban blight in the inner city with a sprawl of ugly office buildings.

Staff unions are gearing up to do battle against the perk attack, even though many privately say they do not even bother to take advantage. "What we have we hold," said a union member. "It's the principle, not the value. If we let them take this away, where will it end?"

At the top of the tree, EU officials can earn pounds 120,000 a year in basic salary. Allowances are generous, while few officials pay more than 25 per cent income tax. Living abroad entitles all EU staff to an allowance worth 16 per cent of the basic salary payable until retirement.

A head-of-family allowance is worth another 5 per cent of salary and the dependant-child and schooling allowances bring in a further pounds 170 a month per child right up to university graduation. Free education for offspring is provided in the special European Schools.