EU budget: Countries clash over priorities

EU leaders meeting in Brussels on Thursday are deeply divided over the 27-nation bloc's spending priorities for 2014-2020.

The two-day summit on the EU's multi-year budget is overshadowed by the eurozone crisis and painful cuts to national budgets. Where do some of the key players stand on the EU's Multi-Annual Financial Framework (MFF)?

UK

The UK will not accept the total budget figure of 973bn euros (£782.5bn; $1.25tn) proposed by European Council President Herman Van Rompuy, which is the basis for negotiation. It is 20bn euros less than the 2007-2013 MFF, but still too much, the UK says.

Prime Minister David Cameron wants a real-terms freeze in EU spending, and is threatening a veto if his EU partners try to increase the budget. Last month Eurosceptics in his Conservative Party and opposition Labour MPs voted for a real-terms cut - a tougher line than his own. The Netherlands and Sweden support his call for a freeze.

The UK wants the EU to shift funds towards research, innovation and the single market, away from the traditional big budget areas of cohesion - help for poorer regions - and agriculture. Cohesion funds should no longer go to the EU's richest countries, the UK argues.

The UK is also determined to keep its controversial budget rebate - worth 3.56bn euros in 2011. It is set to rise to 4.1bn in 2014. The UK is the only country with a rebate - but now Denmark says it wants one too. Germany, Austria, the Netherlands and Sweden negotiated a "rebate on the rebate", leaving France as the biggest contributor to the UK rebate.

France

France has already rejected the Van Rompuy plan, while accepting the argument that EU spending should be reduced. Traditionally France opposes cuts to the Common Agricultural Policy (CAP), and it is sticking to that. French farmers are big beneficiaries of the CAP, which Paris sees as one of the foundations of the EU. France also objects to Mr Van Rompuy's proposal to cut spending on cohesion.

Diplomatic sources in Brussels say France is prepared to play for time if it cannot get the sort of agreement it wants this week. The UK rebate is an issue for France, because in 2011 the French contribution to it was 966m euros.

Germany

Germany, like other net contributors to the EU budget, wants that budget cut. Germany says the MFF should be kept at 1% of the EU's total Gross National Income (GNI), which would be about 960bn euros.

Chancellor Angela Merkel is unlikely to back any big cuts to the CAP, because her Christian Social Union (CSU) allies in Bavaria have a big farming lobby. Diplomatic sources say Germany wants discussion of the UK rebate, and that it will not give up its "rebate on the rebate" if the UK sticks to its position.

Mrs Merkel says the EU will have to hold another summit on the budget early next year if there is no deal this week.

Poland

Poland, which joined the EU in 2004, insists that the budget should not be cut. It is among a group of ex-communist countries in Central and Eastern Europe whose economies benefit from generous EU funding. They argue that the climate of austerity in Europe should not be used an excuse to delay their vital economic development projects. Poland is the EU's biggest recipient of cohesion funding - 67.3bn euros in the 2007-2013 budget. Since 2007 Poland has received 6bn euros from the EU to improve its road network, AFP news agency reports.

Poland's position on the budget is quite close to France, Italy, Greece and Spain - all of them distant from the UK position.

Czech Republic

The Czech government supports the cut proposed by Germany even though the Czech Republic is a major recipient of cohesion funds, diplomats in Brussels say. The Czechs are on the side of those who want to reduce direct subsidies for farmers, saying the EU needs a budget for the 21st Century.

The Czechs received nearly 26bn euros in cohesion funds in the 2007-2013 MFF. The European Court of Auditors criticised Czech monitoring of those projects, saying it was worse than in other EU states, and there have been some corruption cases involving regional officials.