BRUSSELS – European Union leaders prepared the first-ever cuts in the bloc’s budget Friday, bowing to British Prime Minister David Cameron’s insistence on thrift.
After an all-night bargaining session interspersed with catnaps on couches at EU headquarters in Brussels, the leaders reassembled at 6:30 a.m. to consider a 2014-2020 spending ceiling of €960 billion ($1.3 trillion), down from an original proposal of €1.047 trillion and less than the €994 billion spent in the current budget cycle.
At the center of the controversy was Cameron, making his first EU summit appearance since announcing plans for a referendum that could result in Britain leaving the 27-nation bloc as early as 2017.
Britain’s demands for savings ran into opposition from France, Italy and eastern and southern European nations that are keen to tap EU subsidies.
“The numbers that were put forward were much too high,” Cameron told reporters before the summit started Thursday afternoon. “They need to come down — and if they don’t come down, there won’t be a deal.”
Every country has a veto, with the breakdown of spending between agriculture, infrastructure and regional development aid still up for debate and wealthier countries arguing over money- back guarantees from the annual budget.
The negotiations took place under the cloud of the euro debt crisis, which has left less money for the EU-wide budget and damaged the bloc’s cohesion. A deadlock would hobble subsidy programs and force the EU to fall back to annual budget rollovers.
The latest proposal, by EU President Herman Van Rompuy, sliced spending on transport and energy projects and research to €126 billion from the original proposal of €156 billion. Part of the savings was steered to regional development, in a concession to Eastern Europe, and to agriculture, in a concession to France.
Van Rompuy rededicated €6 billion of regional aid for projects to fight youth unemployment, a nod to Spain. On the fundraising side, he satisfied Denmark’s plea for an annual rebate, worth €130 million.
Saying the unprecedented threat to quit the EU didn’t leave Britain isolated, Cameron forged an alliance of convenience with Germany, the biggest net contributor, along with the Netherlands and Nordic countries to press for cuts.
Cameron won a symbolic €1 billion reduction in salaries, pensions and administrative costs for the EU’s 55,000 employees to €62 billion. At the first budget summit in November, he had said, “Brussels continues to exist as if it’s in a parallel universe” when it comes to compensating civil servants.
Cameron won the first-ever cut in overall EU spending in real terms, a demand he made virtually nonnegotiable as he yields to anti-EU voices in his Conservative Party.
German Chancellor Angela Merkel said the most important thing is to leave Brussels with a deal.
France, which also pays in more than it gets out, was caught in the middle. President Francois Hollande assented to further savings as long as they don’t come from the farming budget, a mainly French perk since the early days of the EU.
The sum now up for discussion is equal to about 1 percent of EU-wide gross domestic product. It is dwarfed by public spending at the national level, which averages 50 percent of each country’s GDP.
“It’s ridiculous sometimes when you look at the kinds of differences we’re negotiating: a few billion over seven years,” Luxembourg Prime Minister Jean-Claude Juncker said as the talks got under way.
An accord would shift the scene to the European Parliament, which has threatened to veto any package it sees as too stingy.
Britain demanded a seven-year agreement on actual spending, which is normally set year-by-year. The latest proposal put that figure at €908 billion, below the €913 billion that had been the bottom line.
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