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EU budget summit edges toward collapse

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BRUSSELS, Nov 23 AFP

November 24 2012, 00:51AM

EU leaders looked set to throw in the towel as talks on a trillion-euro ($A1.25 trillion) budget for the 27-member bloc faltered over tensions between rich and poor states and Britain's "virulent" demands for austerity.

British Prime Minister David Cameron kept up his defiant stance on the second day of bitter negotiations on the European Union budget for the seven years from 2014 to 2020.

"There really is a problem that there hasn't been the progress in cutting back proposals for additional spending," Cameron, who back home has to pander to the powerful eurosceptic wing of his Conservative party, told reporters on Friday.

Britain, like many countries across Europe, is responding to the economic crisis with major public spending cuts and Cameron argues that at a time of austerity at home the EU must also make deep cuts.

His bleak assessment of the state of the budget talks was shared by other EU leaders, who arrived one by one at European Council building in Brussels for bilateral meetings before the summit proper resumed after lunch.

"I believe that also in this round, we won't be where have to get to, which is a unanimous decision," said German Chancellor Angela Merkel, repeating a line she had adopted even before arriving in the Belgian capital.

"If we need a second round, then we will take the time necessary for it," she added, referring to the prospect of another summit in the coming months to nail down a deal.

Merkel and French President Francois Hollande both saw Cameron in bilateral meetings on Friday. A British official said afterward that Merkel was "sympathetic" to the British position. No details emerged of the Hollande meeting.

Nearly a year after he angered his European counterparts by vetoing a pact to resolve the eurozone crisis, Cameron was again at odds with them by demanding cuts to the perks enjoyed by so-called "eurocrats" - the well-paid EU civil servants frequently targeted by the British press.

An EU diplomat said the main obstacle at the summit was Cameron's demand for reductions in the planned trillion-euro budget, adding that "the most virulent" countries seeking cuts were Britain, Sweden and the Netherlands.

European Parliament member and Belgian former prime minister Guy Verhofstadt was scathing about the British position: "It's not necessary to isolate Cameron; he can isolate himself."

Cameron had vowed to bring down the budget from a proposed 1.047 trillion euros to 886 billion euros ($A1.11 trillion).

The summit was set to resume on Friday once delegates from the 27 member nations - which have a total population of 500 million people - have had time to examine new proposals on the budget submitted by EU President Herman Van Rompuy.

The proposals reintroduce his own earlier figure of 972 billion euros ($A1.22 trillion) in spending, which comes to just over one per cent of the EU's total economic output, the usual benchmark used in Brussels budget talks.

The latest blueprint which negotiators will work from Friday spreads the funds more generously to sensitive envelopes like the "cohesion" funds for regional development, and the Common Agricultural Policy, the farm subsidy program cherished by France that is the budget's biggest single item.

"We will not accept the unacceptable," warned Prime Minister Mario Monti of Italy, which like France defends farm subsidies, but also backs cohesion funds which have vastly aided Italy's less developed south.

Italy is among the "net contributors", the countries that contribute more to the EU budget than they get back, while once mighty Spain, brought low by the eurozone debt crisis, rejoined the camp of those who get more cash than they put in.

Cohesion funds - billions of euros outlayed each year to the EU's poorer members so they can catch up with richer neighbours - are being defended tooth and nail by the 15 "Friends of Cohesion" nations, led by Poland and Portugal.

By Rory Mulholland