EU summit to begin without new proposal after all-night budget talks

After all-night talks on the next EU budget failed to produce a new compromise proposal, discussions on the thorny issue are set to start again at a full summit meeting on Friday.

After all-night talks on the next EU budget failed to produce a new compromise proposal, discussions on the thorny issue are set to start again at a full summit meeting on Friday.

European Council President Charles Michel held an overnight marathon of one-on-one talks with EU heads of state and government in Brussels – but emerged without a new plan to resolve the dispute, sources from the European Commission said.

Michel has postponed the next round with all EU leaders by one hour to 11 am (1000 GMT), his spokesman Barend Leyts said. “Negotiations continue in the morning,” he tweeted.

Diplomatic sources had previously said that EU officials were to pull together a revised budget plan overnight, to be scrutinized by the 27 member states on Friday.

But EU leaders remain bitterly divided over how much to throw into the 2021-2027 pot and for what ends.

EU budget negotiations are always fractious affairs pitting richer countries against poorer member states, which stand to benefit from grants and subsidy payouts.

This time, the departure of net contributor Britain from the bloc has further raised the stakes by blowing a hole of 60-75 billion euros (65-81 billion dollars) to be filled by either cuts or higher pay-ins.

“Our goal is that our contribution doesn’t rise to excessive levels. We’re representing the interests of our taxpayers,” Austrian Chancellor Sebastian Kurz said on his way into the first round of talks on Thursday.

“Europe is faced with big challenges, and we cannot respond with small answers,” Italian Prime Minister Giuseppe Conte said, listing off high unemployment and climate change as examples.

The net contributors – Germany, Austria, the Netherlands, Sweden and Denmark – want to cap their payments, arguing that they finance the lion’s share of the EU budget. These countries tend to do the best out of membership in the EU single market.

Most remaining countries are strongly resisting planned cuts to domestically popular agricultural subsidies and funds to assist poorer EU regions.

But this must be squared with the European Union’s ambitious policy agenda for the coming years, including a goal for net carbon emissions neutrality by 2050, a more assertive role on the world stage and beefed-up European digital infrastructure.

“We cannot say that we have certain ambitions on Monday and then when Thursday comes around, say that we don’t have the means to pay for them,” French President Emmanuel Macron told his counterparts.

Michel unveiled his proposal for a budget worth just over 1 trillion euros, which equates to 1.074 per cent of EU gross national income, last week to a cacophony of criticism from all sides.

Italy and Portugal said they wouldn’t approve Michel’s budget in its current state, while more frugal states insist on a 1-per-cent cap.

Not a single state has fully backed Michel’s plan, and the European Parliament is threatening to withhold its approval for lack of ambition.

“It is in everyone’s interest to break the artificial dichotomy between net contributors and beneficiaries,” the EU legislature’s President David Sassoli said. “All member states, without exception, profit from the EU.”

If there is no budget agreed by the end of the year, when the current one expires, it could have major implications for businesses or researchers dependent on EU funds, with EU officials warning of a “legal void” for payments to be made.

Furthermore, kicking the can down the road risks taking up valuable EU time and attention at a time of more pressing issues, with post-Brexit trade talks looming, the bloc’s migration strategy in disarray and important summits with China and Africa on the horizon.

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