Many European Union leaders will push for a harshly pared-down budget at their summit this week but the EU parliament insists it is ready to reject a deal that curtails spending on growth and employment.
On the eve of the two-day summit, which begins Thursday, European Council President Herman Van Rompuy said that "for the first time ever - there will be a real terms cut compared to the current budget." Van Rompuy chairs the summits, which are held in Brussels.
Britain is leading several wealthy northern member states in calling for bigger cuts in the seven-year EU budget, which will total about €1 trillion ($1.35 trillion) for the years 2014-2020. On the other hand, poorer eastern and southern countries in the 27-nation bloc want to ensure continued EU financial support.
As the meeting approached, there appeared to be a lot of jostling for position. Parliamentary leaders, meeting in Strasbourg, warned they would reject any plan that undermines the role of the EU.
In Brussels, a spokesman said the European Commission, the EU's executive body, had already agreed to cut more than €1 billion ($1.35 billion) in administrative costs over the budget's seven-year period. But he said more severe cuts would leave the Commission unable to do its job, just as it is being called on to do more and more as the EU integrates more deeply in response to the financial crisis.
"How can we imagine that an EU institution can ensure a proper banking union with a budget that is cut by whatever billions in figures we hear here and there?" said Olivier Bailly, the spokesman. "At the moment, there is a need for a reality check between the requests that are sent to the Commission, the Council, the Parliament, or the European Central Bank, and the budget, the means, that are given to these institutions to fulfill their commitments vis-a-vis the member states and European citizens."
A senior EU official said that, while Van Rompuy is proposing an overall cut, some items within his proposed budget will grow, including an effort to combat youth unemployment.
Spending on programs meant to ensure future prosperity, such as research and development, education and innovation, will also grow in real terms, the official said. He spoke only on condition of anonymity, in line with EU policies.
Don Melvin contributed from Brussels