EU faces tricky balancing act in toxic budget row

European Union negotiators believe they are close to securing British and German backing for a deal on nearly a trillion euros of spending over the next seven years, but last minute concessions may be needed to secure French and Polish support.

European Council President Herman Van Rompuy, who will chair an EU summit starting on Thursday, has taken pains to win over London and north European states furious at a proposed hike in EU spending between 2014-2020 at a time of austerity at home.

But in seeking to appease Britain's David Cameron and Germany's Angela Merkel, Van Rompuy risks alienating others, especially French President Francois Hollande, raising the prospect of a hard-fought few days of bare-knuckle negotiation.

Leaders began with a day of one-on-one meetings with Van Rompuy. All 27 heads of state and government will sit down to dinner together and only then begin to discuss a new compromise budget package as a group.

Failure to strike a deal would add to the impression that EU leaders are unable to take decisive action when needed, after endless rounds of wrangling to resolve the euro zone's long-running debt crisis over the past three years. It would further damage the EU's image with its 500 million citizens.

Dragging the talks into next year would also delay and throw into doubt hundreds of billions of euros of planned investments to boost Europe's economy, particularly in poorer ex-communist eastern member states, and divert governments' attention from contentious efforts to create a euro zone banking union.

Van Rompuy has sliced about 80 billion euros from the European Commission's original budget blueprint, which officials say is close to the 100 billion euros of cuts needed to win the backing of Merkel and Cameron, whose countries are two of the largest contributors to the budget.

"Clearly at a time when we are 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 as he arrived for the talks.

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