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Budget clash leaves EU summit close to failure

German Chancellor Angela Merkel speaks with the media after an EU summit in Brussels on Friday, Nov. 23, 2012. The leaders of Britain and France staked out starkly different visions of Europe's future as talks in Brussels on how much the European Union should be allowed to spend, set the stage for a long, divisive and possibly inconclusive summit. (AP Photo/Geert Vanden Wijngaert) Enlargephoto

German Chancellor Angela Merkel speaks with the media after an EU summit in Brussels on Friday, Nov. 23, 2012. The leaders of Britain and France staked out starkly different visions of Europe's future as talks in Brussels on how much the European Union should be allowed to spend, set the stage for a long, divisive and possibly inconclusive summit. (AP Photo/Geert Vanden Wijngaert)

The leaders of Britain and France staked out starkly different visions of the European Union's future Thursday, leaving a summit on the EU budget teetering on the brink of failure after the first day.

`'I have my doubts that we will come to an agreement," said German Chancellor Angela Merkel after a chaotic day of bilateral negotiations and a belated, short joint session of the 27 leaders.

While British Prime Minister David Cameron is seeking to keep payments into EU coffers as low as possible, French President Francois Hollande called for sustained subsidies for farming and development programs for poorer nations.

With each of the 27 nations having the power of veto over the 2014-2020 budget, the summit negotiations could stretch over the weekend, perhaps without result.

Cameron voiced the concerns of several countries that do not want to see an increase in the bloc's spending plan at a time when many member states are cutting budgets at home.

"No, I'm not happy at all," Cameron said about EU President Herman Van Rompuy's offer to cap spending for 2014-2020 at (EURO)972 billion ($1.25 trillion) in spending commitments.

"Clearly, at a time when we're making difficult decisions at home over public spending, it would be quite wrong - it is quite wrong - for there to be proposals for this increased extra spending in the EU," Cameron said.

Van Rompuy's revised proposal late Thursday did not yield further to Cameron's demands for cuts, keeping to the same total.

The EU budget primarily funds programs to help farming and spur growth in the bloc's less developed countries, and it amounts to about 1 percent of the EU's gross domestic product.

Hollande and Merkel said another summit meeting might be necessary.

`'We should not consider that if we don't get there tomorrow or the day after, all would be lost," Hollande said.

"Germany wants to reach a goal, but there might also be the need for yet another stage," Merkel said.

The European Commission, the EU's executive arm, supports more spending, arguing that cross-border initiatives will help create the economic growth and jobs that the bloc of a half-billion people needs, particularly during a financial crisis that has pushed some countries into recession.

The amount of work Van Rompuy has to do to bring the conflicting views closer together was highlighted earlier Thursday as the bilateral meetings preceding the summit overran, forcing the opening discussions to be delayed by 2 1/2 hours.

Bilateral talks will resume early Friday, with a first joint session set for noon to see if a compromise is within reach.

Facing an ever more vocal euroskeptic electorate at home in the U.K., Cameron is under huge pressure to veto any seven-year deal which would make the budget bigger. The U.K. and other countries that contribute more then they receive from the budget - such as the Netherlands, Sweden and Germany - claim an austerity budget is the only justifiable outcome at a time when almost every member state has to cut its budget to lower debt.

Meanwhile, 15 of the EU's most financially and economically vulnerable countries have joined forces to oppose any cuts to funds earmarked for economic growth and development. These countries include not only traditionally poorer member states, many in Eastern Europe, but also those hit hardest by the financial crisis, like Greece, Portugal and Spain.

They argue that they need sustained, even increased, help to close the wealth gap on the continent and that EU institutions need the means to implement their jobs and growth policies.

"Certain countries want to make drastic reductions in the budget. That's a big mistake," said Elio Di Rupo, Belgium's prime minister.

There is no set deadline for a deal, but the closer it gets to 2014, the tougher it will be for a smooth introduction of new programs.

"In talks with colleagues, I had one message. If this doesn't work out at once, let's be sure that the mood is not that dark that we have to spend months on patching up personal relationships," Dutch Prime Minister Mark Rutte said.

If there is no deal up to 2014, there would be a rollover of the 2013 budget plus a 2 percent increase accounting for inflation.

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Don Melvin and Carlo Piovano contributed from Brussels, Juergen Baetz from Berlin.

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