EU Budget: Leaders Say Deal Is Unlikely

EU leaders could fail to reach a deal on Europe's budget as they enter a second day of negotiations.

France and Germany's leaders are already saying a deal is unlikely after a crucial budget summit in Brussels.

German Chancellor Angela Merkel told reporters: "I believe that the positions are still very far apart.

"We'll meet again at noon and then our president will know what still preoccupies us.

"I think that … we will advance a little, but doubt that we will achieve a result."

French President Francois Hollande also said that some countries needed to "contribute more".

Prime Minister David Cameron has demanded billions in pay and pension cuts from the EU's civil service and presented EU heads with a paper setting out how Brussels could slash at least 6bn euro (£4.8bn) off its staff costs.

His measures include upping retirement ages, lowering pensions and trimming lavish salaries.

But Downing Street also said after the first day that there was "a long way to go" before EU leaders could agree a long-term budget.

Sky's political editor Adam Boulton, who is in Brussels, said that the President of the European Council, Herman Van Rompuy, came up with fresh proposals on Thursday night and sent leaders away to deliberate before reconvening this afternoon.

He added: "Angela Merkel, who is the biggest contributor to the budget, is already saying that she doesn't think that there will be final agreement reached here.

"Europe on these negotiations likes to go down to the deadline and this is not quite the deadline moment."

He added that Mr Van Rompuy appears to be "resisting the pressure" from nations that want to see more money spent by the EU.

"He's sticking by his headline total of below a trillion euros and that is good news for David Cameron," he added.

A pre-summit compromise is already on offer - a seven-year budget "envelope" of 973bn euro (£785bn) for 2014/2020, a cut of nearly 5bn euro (£3.8bn) compared with the 2007/2013 ceiling.

The move was seen in Downing Street as being in the right direction - although the "cut" is in a spending ceiling which officials say has not been reached.

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