EU trillion-euro budget summit ends in failure with Britain as the main spoiler

Talks on the European Union's trillion-euro budget ended in deadlock Friday as leaders of the bloc's 27 member states failed to overcome seemingly irreconcilable differences on how to reduce spending.

"There is no agreement," said one official at the Brussels summit.

Tensions between rich and poor states and Britain's demands for austerity in the budget for the seven years from 2014 to 2020 had set the summit on a rocky course from the start.

Britain was cast as the potential chief spoiler at the meeting, with Prime Minister David Cameron threatening to wield his veto unless spending is frozen in real terms, arguing that at a time of austerity at home the EU must also make cuts.

Britain, like many countries across Europe, is responding to 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.

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.

Read more: EU trillion-euro budget summit ends in failure - The Economic Times

Can Europe's Budget Talks Become The "EU's Financial Cliff?"

The European Union looks set for fresh trouble this week as an extraordinary summit called to agree a long-term trillion-euro budget heads for an ugly showdown, possibly even failure.

Already weakened by three years of economic crisis, the 27-nation bloc of half a billion people faces new trauma at the two-day summit starting Thursday after weeks of talks that have exposed stark divisions between pro- and anti-austerity nations, as well as between the haves and have-nots.
"It's a lose-lose summit," said a senior EU diplomat. "Absolutely no one will leave this summit content if by chance we reach a solution."

"We don't exclude a breakdown," another diplomat told AFP on condition of anonymity.
Europe's leaders begin the talks on the EU's next seven-year budget at 1900 GMT Thursday, with Britain's premier David Cameron in the role of leading spoiler though most governments are putting national interest well above shared concerns.  "Cameron will come with a big knife to get spending cuts and to defend the British rebate," said an EU diplomat.

In the face of Britain's austerity-minded determination to secure a cut of up to 200 billion euros in the 2014-2020 budget, EU president Herman Van Rompuy, who will broker the talks, last week suggested a 75-billion-euro cut to the proposed 1.047 trillion euro ($1.3 trillion) budget.

But that made no one happy. Spain said it would lose 20 billion euros of EU aid, Italy complained of losing 10 billion euros. And a group of Nobel laureates flew to Brussels waving a petition signed by dozens of Nobel winners urging Van Rompuy and other EU officials not to strip funds for research and innovation.

"Fortunately, we only have these summits every seven years," Van Rompuy said Friday after coming under fire from all sides.

Read more: AFP.com

The EU budget needs to be increased, not cut or frozen - by John Palmer

The debate in the House of Commons on Wednesday night saw a united front of Eurosceptic Tory MPs and the Labour opposition demand a cut in the European Union budget. It has – understandably – been greeted by whoops of delight from the Tory right and Ukip. Labour has been left with little more than a schoolboy smirk at the discomfort imposed on David Cameron and an uneasy feeling that it all may rebound against them.

The EU budget debate took place with little or no reference to the real world outside: either to the dire state of the European Union economies (including Britain) or to the political realities of Brussels budget negotiations. One reality is – given the fact that Cameron is not the only EU leader with a veto – the most (actually the worst) that can be achieved is an annual budget freeze but subject to inflation adjustment.

In the British domestic economic debate there is usually at least some reference to the vital role of the public budget in offsetting the crisis of growth and unemployment and also in spearheading investment in infrastructure and research vital in securing growth and jobs. Not so when it comes to the EU budget – even though it could be a very important means of reversing the deepening recession throughout Europe.

When it comes to the EU budget, political discourse quickly reverts to the most basic and ill-informed populism. This was reflected in some of the arguments deployed by so-called "pro-European" Labour MPs who justified their demand for a reduction in the already far too small EU budget that the common agricultural policy pays excessive handouts to the richest landowners in Britain.

The hypocrisy of Tory MPs – urging fiscal federalism on others but refusing it for the UK – is well documented. But last night's foray into the wilder shores of anti-European populism by the Labour frontbench has made even some Labour MPs such as Margaret Hodge "sick". Ed Miliband and his colleagues may think they can pour petrol onto the Eurosceptic flames without being burned. They are wrong. The only winners last night will by Ukip and the far right. The day of Britain's final exit from the European Union has drawn a little closer.

Read more: The EU budget needs to be increased, not cut or frozen | John Palmer | Comment is free | guardian.co.uk