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European leaders will resume gruelling EU budget negotiations shortly amid
signs that a deal may be out of reach.
The late-night talks were adjourned until midday on Friday (11:00 GMT).
A revised proposal from summit chairman Herman Van Rompuy keeps the spending
ceiling in place but reallocates funds.
UK Prime Minister David Cameron told reporters in Brussels on Friday that "it
isn't a time for tinkering" with the EU's 2014-2020 budget. "We need
unaffordable spending cut," he said.
Earlier, German Chancellor Angela Merkel said she doubted an agreement could be
reached at this meeting.
On Thursday the opening of the summit was delayed for three hours because of
stark differences over the budget plans.
Most EU members support an increase in the budget but several countries, mostly
the big net contributors, say it is unacceptable at a time of austerity.
'A lot of detail'
The revised plan from European Council President Van Rompuy keeps a total
spending ceiling of 973bn euros ( 783bn; $1.2tn). But the cuts to cohesion
spending - money for Europe's poorer regions - and to the agriculture budget
would not be as deep. The cuts to cohesion would be 11bn euros less and for
agriculture 7.7bn euros less.
Other spending items would be cut further to compensate, but there is no change
in the proposed levels of administration costs - something which the UK may
find unacceptable.
A top aide to Mr Van Rompuy, Richard Corbett, said the adjustments "reflect the
large majority view of what came out of the bilateral talks" on Thursday.
"What he put on the table was already a reduction compared with the existing
budget," covering 2007-2013, he told the BBC.
He said a deal "could still be put together, but there is a lot of detail to be
gone through".
Earlier, Mrs Merkel said "I think we're advancing a bit, but I doubt that we
will reach a deal".
Richard Corbett, advisor to the EC president, insists a deal can be reached
She has previously said that another summit may be necessary early next year if
no deal can be reached now.
French President Francois Hollande also cautioned that an agreement might not
be possible.
But he added: "We should not consider that if we don't get there tomorrow or
the day after, all would be lost."
The 90-minute session late on Thursday followed a gruelling day of face-to-face
meetings between Mr Van Rompuy and each of the bloc's leaders, followed by a
flurry of backroom discussions.
'Not happy'
The EU Commission, which drafts EU laws, has called for an increase of 4.8% on
the 2007-2013 budget - a position supported by the European Parliament and many
countries which are net beneficiaries, including Poland, Hungary and Spain.
The UK is the most vocal of EU member states seeking cuts in the budget to
match austerity programmes at home.
"No, I'm not happy at all," Mr Cameron said about Mr Van Rompuy's offer.
A Downing Street statement said Mr Cameron had stressed the importance of the
UK keeping its budget rebate, worth 3.5bn euros in 2011.
The statement called the rebate "fully justified". The EU Commission and some
EU governments want the rebate scrapped.
Possible outcomes
A deal after intense negotiations which may continue into the weekend
Failure to agree and a follow-up budget summit
If no agreement is reached by the end of 2013, the 2013 budget ceilings will be
rolled over into 2014 with a 2% inflation adjustment, amid uncertainty over
long-term EU projects
Mr Cameron has warned 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.
Poland and its former-communist neighbours, which rely heavily on EU cash, want
current spending maintained or raised.
Mr Hollande has also called for subsidies for farming and development
programmes to be sustained for poorer nations. France has traditionally been a
big beneficiary of EU farm support.
Failure to agree on the budget would mean rolling over the 2013 budget into
2014 on a month-by-month basis, putting some long-term projects at risk.
Analysts say that could leave the UK in a worse position, because the 2013
budget is bigger than the preceding years of the 2007-2013 multi-year budget.
The UK government could then end up with an EU budget higher than what it says
it will accept now.