European Union leaders ended a two-day summit Friday without a deal on a common budget for the 27-nation bloc, foiled by clashes between nations that are net contributors to EU finances and those that receive more than they pay.
Leaders said in a statement afterward, however, that after a “constructive discussion,” there was the possibility of a deal “in the beginning of next year.”
The negotiations come at a difficult time for Europe. Grim economic conditions throughout much of the bloc have complicated the talks and exacerbated long-simmering discontent in nations such as the U.K. and the Netherlands about funding the budget, roughly two-thirds of which goes to paying farm subsidies and supporting investment projects in the bloc’s poorer nations.
“We’re not going to be tough on budgets at home just to come here and sign off on big increases in spending,” said U.K. Prime Minister David Cameron, who is seeking a freeze in the budget. But Mr. Cameron added that he thought a deal was “absolutely doable.”
Mr. Cameron and other leaders are facing electorates that have become increasingly reluctant to foot the bill for European integration. And the debt problems of the countries that use the euro, perhaps the most prominent symbol of the bloc’s integration, have only made politicians more skeptical of forging closer ties with their European neighbors.
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The leaders spent most of the past two days in meetings with Herman Van Rompuy, president of the EU Council of the 27 governments, and José Manuel Barroso, head of the European Commission, the EU executive arm. As they entered the meeting Friday, many were pessimistic that a deal could be struck.
After the meeting, Mr. Van Rompuy said he is “not excluding at all that we can go further” in reducing the budget. His latest proposal Thursday left the total budget ceiling roughly unchanged compared with a previous plan, at just below €1 trillion ($1.28 trillion).
“It’s already a very restrictive budget,” Mr. Van Rompuy told reporters. “There were some who wanted less cuts, some who wanted more, so I kept the line. My feeling is we can go further, but it has to be balanced and well prepared.”
His new proposal added spending on agriculture and on funding for the EU’s lower-income, mainly East European members. The increases were offset by proposed cuts in a range of areas, including development and foreign policy, and projects aimed at connecting national transport and communications infrastructures.
But the U.K., the Netherlands and a number of other northern European countries were unwilling to accept Mr. Van Rompuy’s proposal because it didn’t curb spending enough. Farm subsidies, the oldest and most politically sensitive part of the EU budget, loomed large in the debate, with northern countries whose economies rely less on agriculture pushing to pare them back.
“The trend towards more money going towards agriculture does not fill us with pleasure,” said Dutch Prime Minister Mark Rutte. “I am cautiously optimistic that we’ll agree [next time] but there are no guarantees.”
Mr. Cameron singled out spending by the EU bureaucracy. “Brussels continues to exists as if it is in a parallel universe,” he said.
France, the bloc’s farming powerhouse, was, as usual, the main defender of the EU’s agricultural subsidies. French Prime Minister François Hollande said Mr. Van Rompuy’s plan cut farm subsidies too much.
Angela Merkel, the German chancellor, said she wanted a deal early next year, and called the alternative to that “extremely unattractive.”
“The discussions today showed a sufficient level of potential for a deal, which is already a good basis,” Ms. Merkel said.
If an agreement isn’t reached early next year, it would jeopardize planning for a broad range of EU programs. Without a deal, spending in 2014 would be at the 2013 level, plus inflation—a higher figure for the budget than the proposals under discussion.
The chancellor said a lunchtime discussion showed there was the will among the leaders to overcome differences that earlier seemed insurmountable. “We don’t have to rush into anything here,” she said.