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Tough EU budget talks push into second day

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(BRUSSELS) - Gruelling European Union talks to agree a trillion-euro budget for the next seven years pushed into a second day Friday even as German Chancellor Angela Merkel warned a deal looked far off.

The summit talks in Brussels were suspended overnight after less than an hour and a half, having already begun hours late because of vast differences on the need for cuts between the bloc's have and have-not nations.

The talks will resume at 1100 GMT on Friday once delegates from the 27 nations have had time to examine new proposals on the 2014-2020 budget submitted by EU president Herman Van Rompuy, diplomats told AFP.

But with an increasingly eurosceptic Britain threatening to wield its veto and splits throughout the EU over the level of spending, Merkel warned that the EU may have to wait until a future summit for any agreement.

"I think we're advancing a bit, but I doubt that we will reach a deal," Merkel said as leaders left.

The talks followed a tough day of face-to-face meetings between Van Rompuy and each of the bloc's leaders, followed by a flurry of backroom bilaterals to discuss a trillion-euro 2014-2020 budget.

"Maybe this meeting will be long and complicated," said Van Rompuy when the two-day talks opened. "Fortunately this issue only comes up every seven years," he added.

Before wrapping up for the night, leaders first nominated Luxembourg's Yves Mersch to the executive board of the European Central Bank, despite a row over a lack of female candidates for the job.

Ahead of the summit the leaders of the EU's "big two" France and Germany -- Francois Hollande and Merkel -- called for efforts to find a solution as they arrived for the talks.

"I have come to seek a compromise, not to set an ultimatum," said Hollande

British Prime Minister David Cameron meanwhile threatened to wield his veto unless the EU met his demands for drastic cuts, particularly for administrative costs.

A new draft proposal from Van Rompuy aims to accommodate the 27 different points of view of the EU member states was circulated to heads of state and government for discussion at a dinner during the talks.

Austria's Chancellor Werner Faymann raised the idea of a fresh summit in January and February, as did the premiers of Italy and Spain, Mario Monti and Mariano Rajoy.

"We will not accept the unacceptable," warned Monti.

Italy is among countries that contribute more to the EU budget than they get back, known as the "net contributors", while once mighty Spain recently joined the camp of those who get more cash than they put into the common pot.

Britain is the most vocal of the group of austerity-driven contributor nations seeking EU budget cuts to match belt-tightening programmes at home.

"No, I'm not happy at all," Cameron said on arrival.

Cameron, who is under constant pressure from eurosceptics in his Tory party to battle supposed European meddling and bureaucracy, had vowed to bring down the budget from a proposed 1.047 trillion euros $1.347 trillion) to 886 billion euros.

An EU diplomat who asked not to be identified said Cameron was prepared to accept a 940-billion-euro spending ceiling.

Austria, Britain, Denmark, France, Finland, Germany, the Netherlands and Sweden have banded together to demand spending cuts, but are far from being on the same page regarding what should be cut or by how much.

France, the biggest recipient of farming funds, has rejected proposals to cut spending on the Common Agricultural Policy (CAP), the largest item on the budget.

But so-called Cohesion Funds -- billions of euros outlayed each year to the EU's newer and poorer entrants so they can catch up with richer neighbours -- are also central to the battle at the summit.

The third hot-button issue will be rebates.

Britain in particular cherishes the budget rebate obtained by then prime minister Margaret Thatcher in 1984 on the grounds that London was paying too much into the bloc's coffers.


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