Britain and France fight their corner

EU leaders are unlikely to reach agreement on the budget as Britain and France continue to stake out their positions.

The British rebate of €3.5bn has been secured, and was not raised as an issue in the new budget put forward by EU President Herman Van Rompuy.

However British demands for a €20bn cut in the budget will not be met.

France has attacked the British rebate with President Hollande saying: “France does not ask for cheques, discounts or wholesale prices. France has a concept of European solidarity.”

France is also lobbying for a general cut in the budget, below Van Rompuy's current proposal of a €1tn cap.

However France would like to see more money going towards development funds and agriculture, the latter being of enormous importance to the country.

Britain is backed by the Netherlands and Sweden in wanting more cuts.

Poorer EU countries, who traditionally lobby for more development funds are now being joined by Greece, Portugal and Spain, who are barely escaping bankruptcy due to EU bailouts.

“Clearly, at a time when we’re making difficult decisions at home over public spending, it would be quite wrong – it is quite wrong – for there to be proposals for this increased extra spending in the EU,” Cameron said.

Among his proposals to save money is a policy to raise the retirement age for EU civil servants to 68 from 63 for all officials under the age of 58 – a policy the EU has demanded of Greece and Italy in order to receive bailouts.

If no agreement is reached, leaders may decide to meet again in January. If discussions fail then the 2013 budget will be kept for 2014 but adjusted at 2% for inflation.