EU summit ends without budget deal

EU summit ends without budget deal

Posted: Updated:

By CARLO PIOVANO and DON MELVIN
Associated Press

BRUSSELS (AP) - A European Union summit charged with agreeing on a long-term budget for the 27-nation bloc has broken up without a deal.

European Council President Herman Van Rompuy, who presides over the summits, that the national leaders had told him and European Commission President Jose Manuel Barroso to continue working toward consensus over the coming weeks.

Van Rompuy said the "constructive discussions" at the summit meant that an agreement could be reached early next year.

Barroso, too, called the talks constructive. But he added, "we are not yet at the point of reaching consensus."

The prospect of failure had loomed over the EU leaders' summit, charged with agreeing on a €1 trillion ($1.25 trillion) long-term spending plan for the 27-country bloc, even before the meeting began. Some countries wanted the budget to rise, other wanted to it to fall - and all had veto power.

Van Rompuy tried to thread the needle. He proposed a budget with some cuts. But in a post-summit press conference he offered a nod to those countries who believe greater spending is essential to kickstart some recession-hit countries' economies.

"Growth in one country benefits all," he said.

The EU budget primarily funds programs to help farming and spur growth in the bloc's less developed countries. In financial terms, the budget amounts to only about 1 percent of the EU's gross domestic product, but carries great political significance as it lays bare the balance of power between the bloc's members.

The bloc found itself divided, notably between richer countries that wanted to contain their contributions to the common budget at a time of economic malaise, and poorer ones that rely on EU money for development aid and economic investment.

British Prime Minister David Cameron was the most vocal leader demanding restraint, while French President Francois Hollande wanted the budget to keep paying subsidies for farming and development programs for poorer nations.

A revised proposal late Thursday by Van Rompuy appeared to do little to appease either side. It kept the same total of €972 billion ($1.25 trillion) in states' commitments as his first proposal - €21 billion less than the 2007-2013 budget - but it shifted some money away from investment projects toward aid for farming and development.

There is no set deadline for a deal, but the closer it gets to 2014, the tougher it will be for a smooth introduction of new programs. If there is no deal up to 2014, there would be a rollover of the 2013 budget plus a 2 percent increase accounting for inflation.

___

Raf Casert contributed from Brussels, Juergen Baetz from Berlin. Don Melvin can be reached at http://twitter.com/Don_Melvin .

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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