16 November 2010 Last updated at 04:05 ET

EU talks on 2011 budget end in deadlock

Governments are tightening their belts - and want the EU to do the same

Talks aimed at setting the EU's 2011 budget have ended in deadlock, making it likely that it will be frozen at this year's level.

Euro MPs blamed government diplomats - the EU Council - for the breakdown.

"The diplomats around the table are not willing to have a dialogue," said Polish MEP Sidonia Jedrzejewska.

The European Commission now has to draft a new budget, but if it is not adopted by January the EU will have to work with a budget month-by-month.

It is the second time in a week that a "conciliation" meeting has ended in deadlock. Talks were suspended last Thursday, amid arguments over the European Parliament's role in future budget discussions.

Bigger debate looms

MEPs say they are willing to accept the EU governments' wish for a 2.9% budget increase - lower than the 6% that the parliament had voted for.

But MEPs want their role in setting future EU budgets to be clarified.

The discussions are particularly sensitive ahead of a bigger debate about the EU's 2014-2020 finances. Hard bargaining is expected in big spending areas such as farm subsidies and the "cohesion" budget for the EU's poorest regions.

French MEP Alain Lamassoure, the parliament's lead negotiator, said "we are proposing a political agreement on working together to avoid future budgetary crises and to ensure sustainable financing for future policies".

Speaking after the talks' collapse late on Monday, parliament president Jerzy Buzek said "the intransigence of a few member states in the Council undermines the confidence of our citizens that the EU is working effectively".

New MEP powers

MEPs argue that the Lisbon Treaty gives them an equal say in budget discussions with the 27 member states' governments, but the procedure for this is not clear.

The European Commission drafts the budget, but that is only the first stage in a long negotiating process. The Commission, like the parliament, wanted the budget increase to be 6%.

Monday's Conciliation Committee talks involved 27 government officials from the Council and 27 MEPs, representing all the EU member states.

If the EU enters 2011 without an agreed budget it will have to finance each budget item month-by-month - and each month's calculation will be one-twelfth of the 2010 budget figure.

That means the EU will find it hard to finance its new diplomatic service, due to be launched next month - the European External Action Service (EEAS).

Funding of the EEAS has been set at 475.8m euros (£404m) for 2011. The initial staffing is 1,643 posts, of whom 1,114 would be Commission officials, 411 from the Council and 118 would be newly created jobs.

The Lisbon Treaty gave MEPs real power to influence the budget, for the first time in the EU's history.