David Cameron blasts EU as budget summit ends without a deal (2024)

It's all gone quiet in Brussels, so I'm going to stop the liveblog for the day.

Keep watching www.guardian.co.uk for analysis and reaction to today's events. Here's a quick closing summary.

European leaders are returning home after a two-day summit which failed to agree a deal on the next EU budget. Talks collapsed around 3.30pm today, when it became clear that the divisions between EU members were too great (from 3.33pm).

Britain, Germany, The Netherlands and Sweden formed an alliance against European plans for increased spending.

David Cameron was highly critical of Brussels, having seen his push for spending cuts rebuffed. The UK prime minister claimed that the EU needs to move into the real world, and insisted that Britain was still committed to Europe. (from 4.30pm). He had earlier seen little support for his push to cut EU pay and perks.

Italy's Mario Monti, though, hit back at the UK. He claimed Cameron's position was incoherent, accusing the British PM of 'demagoguery' in his zeal to cut spending.

European leaders tried to put a positive spin on events. European Council president Herman Van Rompuy argued that leaders had made progress, while Commission president José Manuel Barroso was encouraged that leaders were discussing spending cuts for the first time ever. (see 4.08pm)

Elsewhere in the eurocrisis, the IMF had denied that it is close to agreeing a bailout for Cyprus (see 2.24pm)......and eurozone finance ministers are due to hold a teleconference tomorrow about Greece's ever-delayed bailout (see 10.27am).

I'll be back on Monday, when eurozone finance ministers, the IMF and the European Central Bank will make another attempt to agree a deal on Greece.

Until then, have a great weekend all. Good night!

Here's a date for your new 2013 diary -- EC officials are suggesting February 7 and 8 as posslble dates to hold new talks on the EU budget.

That's via the BBC's Norman Smith, who adds:

The Financial Times aren't impressed by the shambolic way in which the EU summit broke up:

Bruno Waterfield of the Daily Telegraph provides this handy guide to EU policy at this difficult time:

Nick Watt, our senior political correspondent, reckons that Cameron has reasons for optimism as he heads back to London.

Here's what Polish prime minister Donald Tusk told reporters after the summit broke up (via Reuters):

All participants in the summit agreed that the positions (in negotiations) have moved closer to each other and there is scope for compromise, but it will clearly require more time.

It is better than what we had expected only 12 hours ago, but we are certainly far away from a final agreement.......This afternoon I saw for the first time that the negotiating positions of some countries are to reach a compromise, not to drag out endlessly the talks to block them.

For me this was a quality change. Nobody is interested in having the talks fail, and everybody understands they will have to move a little bit.

The fact that cohesion policy and Common Agricultural Policy are regarded as safe from further cuts is not something that we can call a victory, but it is certainly a message that is very comforting for Poland.

UK opposition MPs are claiming that the summit shows that David Cameron is isolated in Europe (even though he seemed to have allies in Germany and the Dutch).

Shadow chancellor Ed Balls said:

David Cameron has failed to persuade other European leaders to deliver the reform of and real terms cut in the Budget which MPs voted for.

(that's a reference to this vote on 31 October). Balls added:

He is increasingly weak and isolated in Europe, just as he is at home. The Prime Minister needs to start building alliances if he is to deliver a good deal for British taxpayers and for the future of the European Union.

Hmmm -- Cameron could probably do to build bridges with the Italians (see 5.27pm), but actually he looks less isolated than at other meetings, especially as the Dutch government wanted an even larger budget cut than the Brits.

Portuguese journalist José Miguel Sardo suggests the Dutch could have actually undermined Cameron's chances of being the most critical voice on EU spending:

David Cameron has just tweeted about the Summit:

And one of his MPs has offered sympathy for his 'ordeal':

Italy's prime minister, Mario Monti, has laid into David Cameron for his conduct during the summit.

In his press briefing, Monti claimed that the UK PM had taken an "incoherent" position on budget cuts, accusing him of being full of 'demagoguery'.

The ever-urbane Monti added that Italy (which is a net contributor to the EU budget, incidentally), is certainly in favour of better management of EU spending and administration (the pay and perks which Cameron attacked), but suggested the UK had gone too far in its attacks.

Monti also reiterated that he believes rebates should be abolished, saying it is not fair for richer countries (Britain) to be subsidised in this way.

Monti added that Italy was also not happy with the budget plans that were on the table, but predicted agreement in "weeks, not months".

Finally, the Italian PM said the atmosphere at the meeting was better than on other occasions. So that's one positive.

Briefings are continuing, but it's pretty clear now that the Summit collapsed because Britain and Germany, with the Netherlands and Sweden in support, made it clear that Herman Van Rompuy's budget proposals were unacceptable.

The lack of progress forced Van Rompuy to throw in the towel, explain Ian Traynor and Nick Watt from Brussels:

Britain made clear that David Cameron was happy to continue with the negotiations over the weekend. But Van Rompuy decided to postpone the negotiations, possibly into the new year, after a furious row about the overall level of the budget.

Mark Rutte, the Dutch prime minister, was adamant that Van Rompuy's €973bn budget would have to be cut by €100m. He won some support from Cameron, Angela Merkel and Fredrick Reinfeldt, the Swedish prime minister.

Cameron was keen to shave at least €50bn from the budget. Merkel was keen to see further cuts on the Van Rompuy proposal, though she would have accepted more modest cuts.

More here.

Finally, David Cameron reiterates that he was not a lone voice in Brussels over the last two days, saying:

We had strong allies, particularly the Dutch and the Swedes in ensuring that unacceptable spending was blocked.

And then the final soundbite:

We've not got a deal, but we've not got an unacceptable deal either.

That's the end of Cameron's press conference.

Has the talk about an In-Out referendum on Britain's future in Europe weakened the Prime minister's resolve, a journalist asks.

Cameron denies it, saying:

Britain does have a part and a role to play in Europe...

But if you just ignore the debate and say nothing needs to change, you won't be serving the UK interest.

Cameron has denied that he doesn't care about Europe -- telling reporters that he and his government remain committed to the EU.

He cites the importance of helping newer members from Eastern Europe, saying that growing their economies will be good for Britain.

The prime minister was also adamant that he was not isolated:

David Cameron has blasted European Union leaders for their failure to agree with him, and the other countries who wanted a smaller budget.

Giving a press briefing now (live on Sky), the prime minister said that Van Rompuy's proposal was "just not good enough".

EU institutions, he said, are living in a "parallel universe", and must adjust to the "real world" where countries are making real terms cuts to their spending to ride out the financial crisis.

Just in: the official statement from the Members of the European Council:

The European Council gives its President the mandate together with the President of the European Commission to continue the work and pursue consultations in the coming weeks to find a consensus among the 27 over the Union's Multiannual Financial Framework for the period 2014-2020.

The bilateral talks and the constructive discussion within the European Council show a sufficient degree of potential convergence to make an agreement possible in the beginning of next year.

We should be able to bridge existing divergences of views. A European budget is important for the cohesion of the Union and for jobs and growth in all our countries.

You can also watch the ongoing Van Rompuy/Barroso press conference here:

Angela Merkel is giving her own press conference across the halls in the EU HQ -- I've embedded the live video feed above.

There's no translation into English, but Open Europe is helpfully watching it and tweets early highlights:

José Manuel Barroso, president of the EC, also denies that the talks have been a waste of time.

He tells the press conference that leaders now have a better idea about their respective positions. He also point out that leaders are discussing real cuts in the EU budget "for the first time ever in EU history".

Van Rompuy insisted that the Summit has not been a disaster, and it would be wrong to 'dramatise' the situation. This is a budget for the next seven years, after all.

Van Rompuy says there was consensus that the EU needs a 'moderation' budget at this stage in the financial crisis, and also says leaders agreed that they need a "growth budget".

Herman Van Rompuy, president of the European Council, and José Manuel Barroso of the Commission are giving a joint press conference now.

You can watch it live here:

After the drama of October 2011 when the UK played its Veto, there's something rather sad about the way today's Summit subsided - not with a bang, but a whimper.

EU officials are briefing that 'net payers' -- the countries whose contributions fund the Union -- could not reach agreement, but that there was no single flashpoint, and David Cameron didn't find himself as a lone voice facing the other 26 countries.

Here's some instant reaction from reporters there:

Angela Merkel is preparing to hold a press conference to explain what went wrong, and outline what happens next. Expected at 5pm Brussels time - so in just 10 minutes time.

Now that the Summit has collapsed, EU officials must write a communique explaining what has happened, and what happens next.

Putting a positive spin on this Summit could be a challenge.

The UK government is briefing that the summit is over, without a deal.

Senior UK government sources have announced that the talks have broken up with the various sides still in deadlock over the issue of funding the EU for the next seven years (Ian Traynor reports from the scene).

The EU summit seems to have descended into chaos and confusion -- with reports that the whole thing has been called off, and other officials insisting that talks will continue.

Reuters is snapping that the summit is over.

However the Polish delegation, for example, insists that talks should continue tonight.

As Ian Traynor just explained to me by phone, leaders can't even agree if they're talking. Some countries would like to push on tonight, but others would rather come back later -- next week, or next year.

Marco Zatterin of La Stampa also believes talks are off:

Developing...

Some photos of the latest diplomatic wrangling inside the EU HQ have arrived:

Back to Brussels, where leaders have been discussing the budget over lunch. Luke Baker of Reuters tells me that they've been tucking into cheese fondue and deer filet (which sounds like an improvement on last night's cold cuts).

Alexander Stubb, Finland's foreign affair's minister, is not optimistic:

But leaders haven't given up yet!

The IMF has just released a statement, effectively denying that it has reached a deal over Cyprus's bailout (as was rumoured this morning - see 10.56am)

Here's the full text:

An EC/ECB/IMF mission has had productive discussions with the Cypriot authorities on the policy building blocks of a macroeconomic adjustment program.

The authorities and EC/ECB/ IMF teams made good progress towards agreement on key policies to strengthen public finances, restore the health of the financial system, and strengthen competitiveness, so as to pave the way for the economy to return to sustained growth and financial stability. Discussions are expected to continue from respective headquarters with a view to making further progress toward a potential program.

The preliminary results of a bank due-diligence exercise, expected in the next few weeks, will inform discussions between official lenders and Cyprus on financing solutions consistent with debt sustainability.

'productive discussions...'good progress'...'potential program' - all phrases that don't scream BAILOUT AGEEED.

Curious -- reports from Cyprus say the government has been holding talks with the country's trade unions to explain the details of a deal with the IMF. Once again, though, debt sustainability looks like the the big hurdle.

More video from Brussels -- this time of Angela Merkel being pessimistic.

Guy Verhofstadt, the former Belgian prime minister, has proposed axing Britain's EU rebate as part of a wide-ranging reform of the way Europe handles its finances.

Verhofstadt, described as an ally of Nick Clegg (now there's a rare species) in the European Parliament, said the EU needed to change to a system of raising finances through direct taxation.

He said:

If own resources [tax revenues that go directly to the EU] are further developed then the rebate shall disappear...

The whole income of the union shall be based on own resources. There are no national contributions. If the national contributions disappear in the future there is no rebate necessary.

What kind of direct taxation might the EU use? Verhofstadt suggests a levy on consumer spending (maybe VAT, or airport duties), or maybe a financial transaction tax.

Speaking of Verhofstadt, he delivered a barn-storming attack on Nigel Farage MEP on Wednesday - saying that the UKIP leader's salary was "the biggest waste of money in the European Union".

Waving his arms, Verhofstadt blasts Farage, saying:

You are (a) member of the Fisheries committee, for example, and you're never there - never....

You're coming here saying it's a scandal, the salaries that are being paid, and you pay yourself a salary without doing any labour in your own committee...

At which point Farage's eyes come close to popping out of his head.

Ian Traynor has been working his contacts in Brussels, and reports that the UK prime minister got the cold-shoulder treatment from the heads of the European Council and Commission

Open Europe, the think tank, has got hold of the revised EU budget proposals which Herman Van Rompuy unveiled last night (and which David Cameron and Angela Merkel have found so unwelcome).

It's now online, here.

Open Europe has analyst the document, to show that Common Agricultural Policy (CAP) spending has risen(as mentioned back at 8am), while there is no change to administration costs despite David Cameron's demands for pension and salary cuts (ala 8.12am):

(the first column, HvR I, show the original proposals and the second column is the revised plan).

Open Europe says the HvR II options are not acceptable to many EU countries:

The increased spending on CAP and Cohesion moves further away from the spending split which many in the UK would like to see, while although the headline figure has not increased it is still probably slightly too high.

So, despite talk of progress last night, it still seems that, from a UK perspective (but also likely a Swedish, Dutch and German one) there are some significant divisions.

New proposals will be produced today? Can HvR III (which sounds like a dubious Hollywood trilogy) deliver a breakthrough?...

Struggling to comprehend what Europe's seven-year €1trn budget means to the average citizen? Panic not - the Guardian has created a nifty interactive which how much we all give to, and receive from, the EU. And on what the money is spent on.

Interesting stuff (as a Brit, I apparently give €180.38 and receive €105.12 - of which €15 goes to French farmers).

Try it yourself.

Herman Van Rompuy's team have been telling the media in Brussels that the European Council feels there are "many options" available towards reaching a "good deal".

Van Rompuy should be unveiling his revised EU budget proposals shortly, although David Carretta of Italian radio station Radio Radicale reports that Van Rompuy may wait until after lunch.

Carretta adds that the Van Rompuy team are still optimistic:

Angela Merkel and David Cameron held talks this morning, in a sign that the UK and Germany are forging a partnership over the EU budget.

From Brussels, our Europe editor Ian Traynor reports that Merkel is offering Cameron strong support. She appears concerned that the UK could be isolated from other net contributors to the EU budget - thus weakening those who want a lower settlement.

Ian also reports:

Angela Merkel received a dose of good news as she arrived at the Brussels summit - German business confidence brightened surprisingly in November.

The Ifo business climate index, a barometer of economic health in Europe's largest economy, rose to 101.4 from 100.0 last month, an increase for the first time since six consecutive declines. Analysts had forecast a modest drop to 99.5.

Munich's Ifo Institute said:

The German economy is holding up in the face of the euro crisis.

Companies expressed slightly greater satisfaction with their current business situation. They were also far less pessimistic about future business developments. Export expectations were positive for the first time in three months (my colleague Nadine Schimroszik reports).

The news pushed the euro to a three-week high of €1.291.

Conversely, Italy's economy continues to suffer, with consumer spending dropping 1.7 % in September as the country continued to contract.

More video - this time of David Cameron's arrival at today's Summit talks, where he tells the press that leaders haven't made enough progress so far and need to stop "tinkering" around the edges.

Dow Jones Newswires is reporting that eurozone finance ministers will hold a telephone briefing on Saturday to discuss the Greek financial programme.

Which suggests they're getting their plans in place for the Eurogroup meeting on Monday.

The clocks have struck noon in Brussels, which means the second day of the EU summit is officially under way.

Pessimism is stalking the corridors, however.

Belgium's prime minister, Elio Di Rupo, claimed that the main problem with Van Rompuy's proposal was there was "not enough money in the pot". He also criticised the UK for not showing more imagination

The leaders of Sweden, Finland, the Netherlands and Denmark have been holding talks (a quadrilateral-meeting?) to discuss the EU budget deadlock -- here's a picture of them as it broke up.

The blurry figure in the foreground is Helle Thorning-Schmidt of Denmark.

There are also reports this morning of progress over the EU's other huge headache - Greece.

Reuters claims that the International Monetary Fund has conceded that Greece should be given until 2022 to bring its debts down to 120% of GDP, not 2020 as it had previously insisted. That's a significant move, if so, and would bridge most of the funding gap.

A separate Reuters story claims that Greece's "foreign lenders" (the IMF, presumably) are considering forcing the European Central Bank to forego the profits on its Greek bonds (which it bought at a discount). That would save Greece around €10bn.

Put together, these two reports suggest a compromise is being strung together, with both the IMF and the ECB giving enough ground to get Greece's delayed aid tranche through.

There are a few important developments in the eurozone crisis this morning, including the news that Cyprus has agreed the terms of a bailout.

Government spokesman Stefanos Stefanou told reporters in Nicosea this morning that the behind-the-scenes briefings were taking place this morning, adding:

We are awaiting the official announcement from Brussels in the afternoon.

This would make Cyprus the fourth member of the Eurozone to seek financial help since the crisis began.

Cyprus has been locked in negotiations with the International Monetary Fund for months, since its banks suffered huge losses through their exposure to Greece.

The final bailout could be €17bn -- or almost its entire GDP last year. A remarkable sum for such a small country.

Here's a video clip of France's president warning that today's negotiations will be tough.

Angela Merkel has just arrived at the Justus Lipsius building in Brussels, and suggested that another Summit will be needed to resolve the budget row.

The German chancellor added that failure to reach agreement today over spending from 2014-2020 would not be "dramatic".

More leaders have arrived at the summit meeting in Brussels and there is little sign of a breakthrough.

Jyrki Katainen, prime minister of Finland, warned the press pack that it would be "difficult" to reach a deal on the EU budget deal today, adding:

everything is open.

And the prime minister of Sweden, Fredrik Reinfeldt, indicated he was in for the long haul:

I am not in a hurry. It will take a long time.

Reinfeldt had previously said he would not accept Sweden being hit with a larger budget increase than other richer nations.

David Cameron has just arrived back at the Summit, and told journalists that EU leaders need to stop tinkering and make real cuts to spending levels.

Cameron said:

Well I don't think there's been enough progress so far.

There really is a problem that there hasn't been the progress in cutting back proposals for additional spending.

It isn't the time for tinkering. It isn't the time for moving money from one part of the budget to another. We need unaffordable spending cut. That's what's happening at home and that's what needs to happen here.

That's via Nick Watt, our senior political correspondent, who's at the scene.

And Ian Traynor flags up that the line about 'tinkering' is a slapdown to Herman Van Rompuy:

Sky's Robert Nisbet has tweeted a nice photo from inside the Summit room, of the UK's desk:

Reminds me of a great picture from May of George Osborne being surrounded at a 2am meeting on bank regulation:

The Brussels press pack are up and about and pondering whether the real message of this summit is that Germany and France have drifted apart.

As I flagged up at 8.00am, president François Hollande refused to accept reductions to farm subsidies -- and is one of the most powerful voices lobbying for a higher budget.

Angela Merkel, though, is leaning towards the UK position (although not as extreme)

The Daily Telegraph's Bruno Waterfield agrees that Merkel and Hollande are on opposite side of this battle. He tweets that four Northern countries - Britain, Germany, the Netherlands and Sweden - are battling three Southerners - France, Italy and Spain.

David Cameron may have failed to cut EU salaries and pensions (see 8.12am), but there was one sign that the Brussels gravy train had taken a shunt -- last night's dinner was rather less lavish than usual.

Leaders nibbled on cold cuts of meat, perhaps a recognition that austerity has to reach the very top occasionally. It feels in tune with the chilly relationships at the heart of the European project, as Ian Traynor and Nick Watt wrote last night in a fascinating behind-the-scenes look at Summit life:

It's a grinding, gruelling way of doing business, seemingly destined for dysfunction. Anywhere else on the European conference circuit, people meet in the morning, do their business through the day and top things off with dinner.

But the leaders kicked off at 8pm, bracing themselves for an extremely long night of bleary-eyed arithmetic. Martial metaphors are to the fore. Red lines, battles, shoring up the defences, duels, and showdowns. And they're supposed to be friends.

European parliament president Martin Schulz reckons a deal palatable to David Cameron will not be delivered today.

Speaking after last night's session broke up, he sald:

The room for manoeuvre for Mr Cameron is so small that it is likely he will not agree, that's my impression.

David Cameron didn't make much progress in his push for a real-terms freeze in the EU budget.

The UK prime minister failed to persuade other leaders that EU administration costs should be sliced by €6bn, leaving the UK's proposal still €50bn higher than the Van Rompuy 'compromise'.

As my colleagues Ian Traynor and Nick Watt reported last night, Cameron proposed:

Increasing the retirement age to 68 for all EU officials now under the age of 58. The current retirement age is 63. This would save €1.5bn.

Cutting the overall EU pay bill by 10% for officials, saving €3bn.

Lowering the pension cap from 70% of an official's final salary to 60%, saving €1.5bn.

A UK official said:

These are not dramatic changes. The commission and others are telling the Greeks, the Italians and others that they should put the retirement age up to 68. In the UK we have cut [public sector] pensions to a career average salary. They argue that it is very difficult legally to change people's terms and conditions. Well, we have managed it in the UK.

The proposal didn't please Brussels (EC president José Manuel Barrosoapparently reacted 'defensively'), but certainly went down well with the Daily Mail, which gushed:

David Cameron brandished a list of the ‘outrageous’ pay and perks of tens of thousands of Eurocrats last night as he clashed with EU leaders over British demands for cuts to Brussels’ vast budget.

The suspicion, however, is that Cameron is making a noise about the Brussels gravy train because he knows he can't persuade other leaders to accept a budget freeze (let alone the cut which the UK parliament voted for).

France was the early winner in last night's talks, with presidentFrançois Hollande persuading Herman Van Rompuy to water down proposed cuts to agriculural subsidies and regional aid.

Poland had also attacked the plans, and the upshot of both countries' lobbying was that Van Rompuy proposed a revised plan, scaling back the cuts to farm subsidies and regional development funds.

But with Van Rompuy's plan still meaning an €80bn cut to the EC's original proposal, other areas are likely to take the hit.

The development was not welcomed by British and German officials, who said it made a budget deal this week more remote.

And speaking of France, Standard & Poor's has just reaffirmed its credit rating as AA+ (that's the second highest rating), but warned that Paris would probably miss its deficit target in 2013.

European Union leaders are struggling to agree a deal over the EU budget after the first day of talks ended without agreement.

Negotiations broke up after midnight in Brussels, after the revised seven-year funding plan proposed by European Council president Herman Van Rompuy wasn't enough to bridge the divide among EU leaders.

Talks resume at 11am GMT (noon local time), but diplomats and politicians are downbeat about the prospects of a deal – threatening weeks, or even months, of conflict that would overshadow efforts to resolve the eurozone financial crisis.

Although Van Rompuy is pushing for a smaller budget increase than originally suggested, his draft proposal is still tens of billions of euros higher than the sums acceptable to the likes of Britain – who has been playing the traditional role of a trouble-making Scrooge.

Angela Merkel, Germany's chancellor, has already said there has been limited progress. She warned last night:

I believe that we will move forward a little tomorrow but I have my doubts that we will achieve a result

There is a high likelihood of a second stage.

British officials are also downbeat, saying that much more talking will be needed before the "right" deal can be agreed.

Last night's talks (which began three hours late) have highlighted the bitter divisions within the EU. As our Europe editor Ian Traynor tweeted, it's yet another missed opportunity to make a deal:

I'll be covering the latest developments in Brussels through the day, and also tracking the action across the eurozone financial crisis.