Summit standoff as EU leaders grapple with Brexit-sized hole in budget

EU leaders made no headway on Thursday in fractious talks on a joint 2021-27 budget that was left with a 75 billion-euro (62.9 billion pounds) hole after Britain’s departure at a time when they face costly new challenges from climate change to migration.

The joint budget is the most tangible expression of the European Union’s priorities over the next seven years – and its member states’ willingness to stump up cash for them – but divisions were evident even before the talks began in Brussels.

The 27-member bloc wants to spend more on climate, migration, digitalization and security but richer net contributors to the budget refuse to pay more, and beneficiaries want to retain the support they receive for farming and development.

Britain, which left the EU last month, was the second-biggest net contributor to the budget after Germany.

“I hope that we make sizeable progress... It’s a complicated task and certainly big differences have to be overcome,” German Chancellor Angela Merkel said as she went into the summit.

The starting point for discussions on the size of the budget is 1.074 percent of the bloc’s gross national income (GNI) or 1.09 trillion euros. While only a fraction of member states’ national budgets, it is still seen as far too much by some and far too little by others, and diplomats said it is unlikely that the gap between them can be closed over two days of talks.

“It would be unacceptable to have a Europe that compensates for the departure of the British by reducing its own means,” French President Emmanuel Macron said. “I will take the time needed to reach an ambitious agreement. This could take several hours, several nights, several days.”

There was no drama on the first day of the summit. The leaders laid out their known positions one by one and then the summit chair, European Council President Charles Michel, held meetings with each one into the night to come up with a new starting point for negotiations on Friday morning.

The battle over the size and priorities of the long-term budget exposes rifts within the EU, between countries in the north and south, between east and west, and between more developed and less advanced economies. [Reuters]