A second significant outcome for Ireland was the changes I negotiated in the areas of degression and modulation. The Commission's proposals for degression and modulation represented a serious threat to the level of direct payments in Ireland, which are of such crucial importance to farm incomes. On the issue of degression, I strenuously opposed the proposal to reduce direct payments by up to 13% to meet future financing needs. The compromise agreed requires the Council to review from 2007 onwards the annual financial circumstances and, if budget deficits arise, to take necessary action at that stage. This is a much more reasonable and acceptable approach.