Gordon Brown has told his European counterparts that the British budget rebate remains "fully justified".

Attending a meeting of EU finance ministers on Tuesday, the chancellor sought to head off French demands for the annual £3.2 billion repayment to be scrapped.

The UK retains a veto on the rebate famously negotiated by Baroness Thatcher in 1984 and has staunchly defended it ever since.

The adjustment to the funding for the EU was put in place to even up contributions to the budget when set against funds coming back from Brussels.

Brown argues that even though Britain has shot up the European wealth league in the past 20 years, as France points out, the Treasury remains a net loser.

Ahead of the meeting he prepared statistics designed to show that even with the rebate, Britain is a leading net contributor to the EU.

"Without the rebate we would have been the biggest net contributor over the last seven years and we would be the biggest in the next seven years," said a Treasury spokesman.

Competition

The move came as the chancellor also opened up a new front in his battle with Brussels over competition policy.

At the Ecofin meeting Brown presented his report from Siemens chief executive Alan Wood showing that many member states are not awarding government contracts to UK firms, even when they are cheaper.

Backed by the CBI, he argued that the findings show the need to increase the pace of market liberalisation and reform of procurement procedures.

"This is an essential element of the economic reform agenda and it cannot be ducked. To be effective, economic reform must include reform of the state aid regime," Brown said.

"Europe needs to do more to create a genuine single market in public procurement, in which European and international rules are fairly applied, and to allow businesses to compete and create jobs across the EU.

"This report shows clearly that there is widespread preference for domestic industries in many parts of Europe. And people right across Europe will want to know why their governments are paying over the odds for services and equipment simply because they have refused to open up their markets and promote competition to achieve better value for money and a better quality of service.

"Other countries must open up their markets to fair competition. We will continue to promote the benefits of market opening and greater competition to other member states and the European Commission so that British manufacturers and British workers do not lose out."

However the Commission has rejected the criticism as unfounded.

"I don't think there is any evidence that UK companies are singled out for particularly harsh treatment," an official said.

Another told the Financial Times newspaper that Brown was "pandering to the eurosceptic press".

"Stories of how Gordon is going to teach the Eurocrats a lesson before each and every Ecofin... reinforce stereotypes about Britain being in a state of conflict with the rest of Europe rather than the European Union being a source of jobs and prosperity for the UK," he said.