EU leaders strike deal on budget

European Union leaders reached agreement on the first ever cut in their common budget yesterday after 24 hours of intense negotiations, seeking to placate millions at home struggling through government cutbacks and recession.

The expected deal met the demands of northern European countries such as Britain and The Netherlands that wanted belt-tightening, while maintaining spending on farm subsidies and infrastructure to satisfy the likes of France and Poland.

It is the first net reduction to the EU’s long-term budget in the bloc’s history, representing a decrease of around three per cent on the last budget and shaving spending in areas such as infrastructure, bureaucracy and scientific research.

Last-minute haggling over precisely how to divide up the €960 billion to be spent between 2014 and 2020 dragged out the process, before Herman Van Rompuy, the president of the European Council and chairman of the summit, announced that a definitive deal had been struck among the leaders.

At a news conference shortly afterwards, battling to stay alert after nearly 36 hours awake, Van Rompuy said the agreement was a budget of moderation that reflected straightened times.

The deal must now be approved by the European Parliament, where leading legislators have already expressed opposition. Securing parliamentary approval is likely to take several months and is far from guaranteed.

After negotiating through the night, leaders broke for a brief rest, allowing German Chancellor Angela Merkel to swap her green jacket for a lilac one, and returned to address a list of questions, including how to satisfy smaller countries such as Romania and Bulgaria among the 28 states covered by the budget.

Mindful of their restive voters, northern European countries were adamant that as they shrink spending at home and grapple with the aftermath of the global financial crisis, the EU had to do the same by cutting headline spending.

Around €12 billion was cut from the last budget proposal. (Reuters)