EU budget summit offers hours of hard bargaining

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 €973 billion. 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 €309.5 billionh for cohesion (32% of total spending) and €364.5 billion for agriculture (37.5%).

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

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 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.