EU budget: Talks end amid stand-off between ‘frugal’ and other nations

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An EU budget summit ended without agreement on Friday following a stand-off between wealthy “frugal” member states and other countries.

The so-called “frugal four” of Denmark, Austria, Sweden and the Netherlands said they would not accept a budget of more than 1% of the bloc’s GDP.

France’s Emmanuel Macron said it showed “we don’t need Britain to show disunity”.

Brexit has left a €75bn ($81bn; £63bn) gap in the seven-year budget.

The UK was a net contributor to the EU.

The EU’s current budget framework runs to the end of this year, so the new one will cover the period from 2021 to 2027.

German Chancellor Angela Merkel admitted that the talks had been broken off because “differences are too big”, but warned: “We are going to have to return to the subject.”

Mr Macron meanwhile criticised countries for “forming blocking coalitions”.

Both the frugal four and net beneficiary countries – 17 member states including Spain, Portugal, Greece, Poland and Hungary dubbed the “friends of cohesion” – rejected summit chairman Charles Michel’s compromise proposal, which would have capped joint spending at 1.069% of joint GDP.

That was slightly less than his original proposal of 1.074%, equivalent to €1.09 trillion.

But net beneficiary countries wanted more than 1.074% while the frugal four wanted a maximum of 1%.

The BBC’s World Service economics correspondent Andrew Walker says the size of the EU budget matters a lot to EU leaders, financially and also politically.

They want to be able to claim to the audience at home that they have achieved their aims and looked after their national financial interests, our correspondent says.

There is also disagreement about how the budget would be spent.

The frugal countries want more spending on borders following the 2015-6 migrant crisis, climate change, security and digitisation.

Beneficiary eastern and southern countries want spending on “cohesion funds” – money for poorer regions – and subsidies for farmers, which is also supported by France, Ireland and others.

Mr Michel’s compromise deal preserved rebates for net contributors such as Germany, included slightly more cash for agriculture to appease France and increased the share of spending on climate change to 27% – but was still rejected.

However, Austrian Chancellor Sebastian Kurz said there had been “good discussion” and “movement in the right direction”, adding that two or three summits were usually needed to agree a budget.

Mr Michel will now consult member states over a date for a new summit. If no deal is reached by the end of the year the EU will have to put projects on hold.

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