British Prime Minister David Cameron is prepared to leave EU budget negotiations without a deal today and tomorrow, if other EU leaders do not accept a freeze or more cuts to the bloc's budget for 2014-2020 – this does not make good reading.
The EU heads of state are gathering in Brussels today to pick up where they left off in November. Back then, EU President Hermann Van Rompuy and European Commission President Jose Manuel Barroso had said that progress had been made and that there was an outline to reach agreement now – in February. But given Cameron’s claims, it is looking very difficult.
Mr Van Rompuy warned member states not to lose sight of the "bigger picture" in what he expects to be "difficult, lengthy and messy" talks on the EU budget for 2014-2020 today. Last November, he proposed a reduced budget of €973 billion but failed to bridge the differences, with London seeking an even sharper reduction to €886 billion.
The main dispute concerns how spending cuts should be divided up between Cohesion Funds, which help newer members catch up with their peers, and the CAP, jealously defended by France.
French President Francois Hollande said on Tuesday that he was ready to compromise on the EU's trillion-euro 2014-20 budget but warned that the spending cuts some members want must not undercut fragile growth.
The November summit failed when several member states, led by Britain, called for sharp budget cuts at a time when all governments were having to reduce spending so as to balance the public finances.
Hollande told MEPs that France was committed to the European project, an economic and social model "envied on all other continents," but the debt crisis meant that many people were losing faith, putting national interests first.
EU leaders, including German Chancellor Angela Merkel, have warned that this week's summit is unlikely to produce an agreement.
A key question as leaders embark on a final frenzy of bargaining is how far France and Italy will be willing to stretch to accommodate UK demands for a further €30bn in reductions from a draft proposal that totalled €973bn, not including off-budget items.
The one point on which all parties seem to agree is that any further reductions will come largely from the “growth and competitiveness” heading of the budget, which includes research and development, innovation and broadband internet, among other items.
Mr Van Rompuy is not expected to present a new draft until leaders arrive today – a tactic intended to head off the bazaar-like atmosphere that typically prevails at such summits, in which countries seek to extract last-minute favours as the price of their support.
In the run-up to the summit, there was confidence that a compromise was in sight. Another failure would not only dent the bloc’s confidence but cause interruptions in EU programmes next year because of the lengthy lead-time needed to pass more than 60 pieces of authorising legislation.
This week’s summit also presents an opportunity before political events take over, such as Italian and German elections, intrude and make negotiations more challenging. With that in mind, Angela Merkel, the German chancellor, has stepped up efforts to forge a compromise. Malta, of course, has its own negotiating to do. In the last round of talks in November, the government managed to eke more funds out of the EU for the next budget allocation, but it is still short of the mark it was aiming for – despite assurances By Germany, in a bilateral meeting in December, that it would support Malta’s demands. We will wait and see.