Disagreement between member states, the European Commission and the European Parliament over next year’s EU budget has prompted the EU Executive President to make a final appeal asking the 27 state leaders to support an increase.

In his letter, also sent to Prime Minister Lawrence Gonzi, Mr Barroso made it clear the recent decision adopted by the Council (member states) to limit next year’s budget increase to just 2.8 per cent will cause major problems to the Union.

Admitting his concern over the ongoing budget negotiations, Mr Barroso warned that less money to Brussels will mean the EU cannot finance all its commitments.

“Many of the projects (already agreed) will not get off the ground. Putting into question the ability of the EU to honour its obligations undermines the credibility of our funding programmes and, indeed, of our commitment to support growth,” he said.

Earlier this year, the Commission requested a 6.8 per cent increase in the 2013 budget, citing the financing of projects already given the green light, which need to be paid by the end of 2013. However, the larger member states such as Germany, France and the UK, which are also the major paymasters, insisted their contributions should be frozen and that no increase should come out of their coffers towards the EU’s.

Malta, like all the net beneficiaries, argued to the contrary, as more money to the EU budget would mean more funding for its projects.

However, all 27 countries had to compromise and a common position was adopted last week to limit next year’s rise to just 2.8 per cent.

While recognising many member states are currently cutting their national budgets due to the ongoing financial crisis, President Barroso insisted more money is needed next year.

“Cutting the payment levels by more than €5 billion in 2013, as the Council is proposing, would be a false economy,” he said.

“It would have serious consequences for economic recovery as these cuts would affect regions, researchers or SMEs with the risk that they would then be starved of finance.”

Final negotiations among Council, MEPs and the Commission are expected to start in September following the EU summer recess next month.