Cameron holding talks with Hollande

Britain's Prime Minister David Cameron welcomed on Tuesday Francois Hollande to Downing Street as the French president makes his first visit to Britain since taking office, it was confirmed here. The Prime Minister appears intent on smoothing over relations with the new, socialist occupant of the Elysee Palace after a difficult start, commentators said. Following their working lunch at No 10, Hollande will have a 30 minute audience with the UK Queen Elizabeth at Windsor Castle, outside London, according to his visit's program. Even before Hollande was elected there were signs of strain - with Cameron refusing to meet him when he visited London during the election campaign. Cameron then caused dismay in France when he suggested he would "roll out the red carpet" for any French business seeking to flee to Britain to escape higher taxes under the new president. While both sides may wish to put such difficulties behind them, underlying differences remain on a range of important issues, the commentators suggested. In the European Union, Hollande believes public spending can help generate growth while Cameron has been pressing for "restraint" in the forthcoming budget negotiations. At last month's summit in Brussels, the Prime Minister pointedly emphasised that he would not accept any reduction to Britain's budget rebate won by former Conservative PM Margaret Thatcher in the 1980s. The two men have also clashed publicly on the issue of an EU-wide tax on financial transactions, which Hollande supports and Cameron is determined to resist, it was pointed out. The Prime Minister's official spokesman said, "They are going to talk about economic policy. France are setting their fiscal policy, we are setting our fiscal policy." There is more likely to be agreement when they come to discuss other foreign policy issues, with Syria, Iran and UK-French defence co-operation expected to be on the agenda.