EU leaders set for budget battle

22 November 2012 Last updated at 00:01 GMT Commission President Barroso: His team manages the budget - but the politicians decide EU leaders are to begin talks on the bloc's seven-year budget, with many of them calling for cuts in line with the savings they are making nationally.

Countries that rely heavily on EU funding, including Poland and its ex-communist neighbours, want current spending levels maintained or raised.

The UK and some other net contributors say cuts have to be made. At stake are 973bn euros (£782.5bn; $1,245bn).

The bargaining in Brussels will continue on Friday, or even longer.

The draft budget - officially called the 2014-2020 Multi-Annual Financial Framework (MFF) - was drawn up by European Council President Herman Van Rompuy, who made cuts to the European Commission's original plan.

France objects to the proposed cuts in agriculture, while countries in Central and Eastern Europe oppose cuts to cohesion spending - that is, EU money that helps to improve infrastructure in poorer regions.

They are the biggest budget items. The Van Rompuy plan envisages 309.5bn euros for cohesion (32% of total spending) and 364.5bn euros for agriculture (37.5%).

The EU budget is a small fraction of what the 27 member states' governments spend in total.

Many hurdles

German Chancellor Angela Merkel says another summit may be necessary early next year if no deal can be reached in Brussels now.

In a speech to the European Parliament on Wednesday, the EU Commission President, Jose Manuel Barroso, complained, "No one is discussing the quality of investments, it's all cut, cut, cut."

UK Prime Minister David Cameron has warned that he may use his veto if other EU countries call for any rise in EU spending. The Netherlands and Sweden back his call for a freeze in spending, allowing for inflation.

Any of the 27 countries can veto a deal, and the European Parliament will also have to vote on the MFF even if a deal is reached.

Failure to agree would mean rolling over the 2013 budget into 2014 on a month-by-month basis, putting some long-term projects at risk.

If that were to happen it could leave Mr Cameron in a worse position, because the 2013 budget is bigger than the preceding years of the 2007-2013 MFF. So the UK government could end up with an EU budget higher than what it will accept now.

The European Commission says that the EU budget accounts for less than 2% of public spending EU-wide and that for every euro spent by the EU the national governments collectively spend 50 euros.

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Cameron set for EU budget battle

22 November 2012 Last updated at 07:29 GMT Herman van Rompuy will oversee the negotiations and meet leaders on a one-by-one basis David Cameron is set to press for a minimum real-terms freeze in the EU's budget as European leaders gather ahead of a crunch summit to determine its spending between 2014 and 2020.

The UK PM is seeking to build alliances in Brussels ahead of what is expected to be two days of intense negotiations.

Germany is among the UK's main allies but other nations support the European Commission's call for higher spending.

The UK Parliament recently urged the EU to cut its total expenditure.

Ahead of the special budget summit, UK Deputy Prime Minister Nick Clegg said the government's position was "tough but realistic".

He said most people would think it was "perfectly reasonable" for the EU to tighten its belt.

Spending ceiling

The EU's 27 member states must set a ceiling for what they are prepared to spend in total over the 2014-2020 period, as well as discuss how much will be set aside for specific areas such as business, agriculture and security.

The European Commission has proposed a ceiling of 1,033 billion euros (£831bn), which would be 5% higher than the current 2007-2013 period. The UK, Germany, Sweden and the Netherlands are among those who have said such a rise would be unacceptable at a time of austerity across the continent.

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Both the prime minister and I have spent, whatever our other differences on Europe, a lot of time working together to make sure the British voice is heard”

End Quote Nick Clegg Deputy Prime Minister The UK has described a separate proposal from European Council President Herman van Rompuy for a 973 billion euro (£782bn) threshold as a step in the right direction.

But the UK believes that further cuts, potentially of up to 80bn euros, can be achieved as Mr van Rompuy's plan anticipates substantial increases in certain areas such as infrastructure spending.

Mr Cameron has said he is prepared to veto any budget deal that is bad for the UK and argued that any above-inflation rise would be unjustified when many countries are cutting spending at home.

MPs voted last month to back a real-terms cut in spending, saying it would strengthen the UK's negotiating position.

But UK officials have acknowledged this will be difficult to achieve given many of the EU's poorer nations - unlike the UK, Germany and France - are net beneficiaries of the budget and unlikely to countenance any cuts.

'British voice'

Although countries' individual contributions are not up for discussion at the summit, Mr Cameron has also vowed to defend the UK's multi-billion pound rebate first secured by the Thatcher government in the 1980s.

Who wants what from the EU budget deal?

Mr van Rompuy is expected to hold one-on-one meetings with EU leaders on Thursday to establish what their "red lines" are ahead of general negotiations, which officials admit could slip into Saturday or even Sunday.

German Chancellor Angela Merkel has said she is not sure the summit will come up with a "definitive deal" and EU leaders may have to reconvene early in the new year.

Mr Clegg said the UK was looking for "just common sense".

"A common sense approach, which says look there's not enough money to go around at the moment... let's make sure that's reflected in the European Union budget and that's why we're saying that it shouldn't increase by more than inflation."

If the opportunity arose to cut the budget, the UK would seize it, he added.

"We have had to cut out many budgets here at home. We've got a tough approach but it's a realistic approach and both the prime minister and I have spent, whatever our other differences on Europe, a lot of time working together to make sure the British voice is heard."

But UK Independence Party leader Nigel Farage said Mr Cameron would be unable to get a "good deal" for the UK and that the European Commission and MEPs believed the state could "create wealth".

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