German chancellor Angela Merkel has dampened expectations for an agreement on the EU budget this weekend.
EU leaders will make a second attempt to agree on a new seven-year financial plan for the union at noon today amid pessimism over the prospects for a deal on the EU budget this weekend.
As the talks broke up late last night, Dr Merkel dampened expectations. "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," she said.
After a long day of bilateral meetings, the formal talks started more than three hours late at 11pm when the leaders met European Parliament president Martin Schulz.
European Council president Herman Van Rompuy suspended last night's summit almost as soon as it began.
Mr Van Rompuy eased his proposal for deep cuts to Europe's agricultural policy in an attempt settle a deep schism over the next EU budget.
Immediately afterwards Mr Van Rompuy tabled his compromise. Without any detailed discussion, he asked the leaders to examine the new plan overnight..
The talks present a threat to Ireland's €1.7 billion annual receipts from the common agricultural policy, something Taoiseach Enda Kenny has vowed to defend.
"Obviously 85 per cent of our funding comes from the CAP. It is just so important in the sense that Europe has oftentimes underestimated the potential for the development of economies and jobs and opportunities from the agri-sector," Mr Kenny told reporters.
Mr Van Rompuy had proposed a €25 billion cut in the allocation for agriculture from a budget plan tabled by the European Commission.
He has now proposed putting €7.7 billion back into the CAP budget, so the reduction would be €17.3 billion. if accepted.
He has also proposed returning €11 billion to the cohesion budget, erasing almost half of the €25 billion cut.
Such changes are to be funded in part by cuts to the Connecting Europe transport and energy plan. It remains unclear whether they will prove acceptable.
"We need everybody to understand what the other's positions are. Then people focus and people realise that the landing stretch is very limited," said a summit insider.
In spite of some optimism in the run-up to the summit that a deal might yet be salvaged, German chancellor Angela
Dutch prime minister Mark Rutte was cautious about a deal. "I'm not sure we'll succeed in one go. It's very complex. I have been in touch with several colleagues over the past days and only had one message," he said. "If it doesn't happen at once, we have to avoid worsening the atmosphere by so much that we need months to restore personal relations."
The gruelling budget talks by EU powers come amid antagonism among many leaders at the hardline stance adopted by British prime minister David Cameron.
Mr Cameron, who is pressing for an expenditure freeze and deep cuts to the EU administration budget, showed no sign of compromise.
"We are going to be negotiating very hard for a good deal for Britain's taxpayers and for Europe's taxpayers and to keep the British rebate," he said.
His threat to wield his veto - although it was copied by some of his counterparts - led to frustration and veiled criticism from other leaders.
"I can’t imagine how we can convince them, but they will have to be convinced," Jean-Claude Juncker of Luxembourg said.
Belgian prime minister Elio di Rupo was also critical of Mr Cameron’s stance. "It's a shame that for the British, Europe is primarily a single market," he said. "For me, for Belgium, Europe is more solidarity and prosperity for all Europeans, so I will plead with somebody such as David Cameron for a more ambitious budget."
