EU states have hit upon a compromise deal that will allow them to fund the Galileo satellite project, and save some face. States voted to back a €2.4bn funding deal, drawing cash from unused farming subsidies, and restructuring research and industrial spending for the year.

This means the European rival to the US military's GPS system can go ahead, but no extra public funds will be written into the EU's budget to pay for it.

The idea of using taxpayers' cash to fill the gap in funding was particularly abhorrent to Germany, which was worried about creating a precedent of using up excess funds instead of passing them back to the member states. The UK is said to have had similar concerns, but unlike Germany, eventually voted in favour of the plan.

German officials suggested seeking the money from ESA, the European Space Agency, instead.

On Friday, the EU agreed a new tendering process for work on the project, aimed at ensuring no one country won too much of the business. The project will be split into six parts, with each member state able to be the prime contractor on a maximum of two sections.

According to reports, Berlin has welcomed this move, saying it had been concerned that German contractors would be excluded from the bounty. ®

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