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Mrs Thatcher returned to Downing Street in the early hours of this morning after the collapse of talks regarding the rebate to Britain from Europe.
It is understood Mrs Thatcher asked for an annual rebate of £730m but was offered £580m, which she refused.
The rebate makes-up any shortfall between money the UK invests in Europe and how much is eventually returned.
Mrs Thatcher described the situation as "frustrating" after the members had come so close to a settlement but run out of time.
As it ended in failure, French and Italian authorities announced they would consider blocking Britain's £450m rebate from last year.
Mrs Thatcher said she would then consider withholding Britain's payments to Europe until the rebate was settled.
The matter will be discussed by the Cabinet tomorrow but in the House of Commons this afternoon Mrs Thatcher made clear she did not intend to back down describing the actions of the European Community as "reprehensible".
"It is almost intolerable that one should be expected to send a supplementary levy in the face of what has happened," she said.
But her European counterparts placed the blame on Mrs Thatcher and stated her actions had left the community in disarray.
Greek leader Andreas Papandreou said, "It would be a great relief if Britain left the EEC".
And Italian premiere Bettino Craxi said: "The British government bears the entire responsibility for this failure."
The row brings into question the future of the EEC and what action the other nine member states should take.
EEC President Gaston Thorn said it was imperative an agreement was reached.
"We have so many challenges to face and the community is getting more and more shaky. We cannot go from one failure to another."
The discussion on rebates has been raging for some time since Edward Heath's government did not decide on a payment plan when it negotiated Britain's entry to the community 12 years ago.
The row had been rumbling for five years with Mrs Thatcher demanding money be returned to Britain.
But other member states said contributions were like taxes - nobody could claim back what they put in.
Mrs Thatcher said unless a rebate was given she would veto any further expansion of spending.
The rebate made up the shortfall between what the UK paid into Europe and what it got back.
But Britain often got less back than other states because of its relatively small farming industry and the fact so much spending was on farm subsidies.
In June 1984 at the Fontainebleau European Council an agreement was reached to reduce the UK's budgetary agreement.
Under the deal, for every £1.50 per capita the UK poured into Europe it got £1 back.
In 2005 Britain was forced to agree to give up part of the rebate to help pay for enlargement of the EU. The deal also included a commitment to review farm spending in 2008.
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