EU leaders are to begin talks on the bloc’s 2014-2020 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 neighbors, 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 euros ($1,245 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 billion euros for cohesion (32% of total spending) and 364.5 billion euros 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.”
Arriving in Brussels, UK Prime Minister David Cameron said: “These are very important negotiations.
“Clearly at a time when we are making difficult decisions at home over public spending it would be quite wrong, it is quite wrong, for there to be proposals for this increased extra spending in the EU.”
David Cameron, who was due to meet Jose Manuel Barroso and Herman Van Rompuy, 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.
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 David 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.