EU leaders brace for tough budget summit

British Prime Minister David Cameron arrives to Brussels for a two-day EU leaders summit on November 22.

Story highlights

  • EU leaders are discussing the bloc's next seven-year budget plan in Brussels
  • The European Commission wants to raise its budget for 2014-2020 to $1.2 trillion
  • Some EU nations, including Britain, are opposed to a budget increase
  • Cameron: "We are going to be negotiating very hard for a good deal for British taxpayers"

European Union leaders are gathering at a summit in Belgium Thursday to try to reach an agreement on a new seven-year EU budget, with tensions high due to the continuing economic crisis.

The European Commission wants to raise its budget for 2014-2020 to $1.2 trillion -- but the proposal has already met fierce opposition from some austerity-stricken member states.

They argue that they're having to make heavy cuts to their own national budgets, so they want to see the EU budget frozen or cut as well. The majority of EU funding comes from contributions from member states.

British Prime Minister David Cameron has been a vocal critic of the proposed budget and has threatened to exercise Britain's veto if necessary to protect its interests.

SAP's Snabe: No need for 'Grexit' plans

    Just Watched

    SAP's Snabe: No need for 'Grexit' plans

SAP's Snabe: No need for 'Grexit' plans 02:40
PLAY VIDEO
France's credit rating woes

    Just Watched

    France's credit rating woes

France's credit rating woes 03:28
PLAY VIDEO
European workers protest austerity

    Just Watched

    European workers protest austerity

European workers protest austerity 03:04
PLAY VIDEO

Read more: EU leaders agree on bank oversight

"I'm not happy at all. These are very important negotiations. 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," he told reporters Thursday morning as he arrived in Brussels.

"So we are going to be negotiating very hard for a good deal for British taxpayers and for European taxpayers, and to keep the British rebate."

The rebate is a multi-billion dollar sum that Britain gets back from the European Union because it benefits less than other member states from agricultural subsidies. It was first secured by former Prime Minister Margaret Thatcher in the mid-1980s but is viewed as unfair by some nations.

Read more: France 'not sick man of Europe'

If Cameron or others do veto any real-terms spending increase, the budget plan may have to be rolled over.

A number of bilateral meetings are taking place in Brussels ahead of the negotiations between all 27 EU member states, with the summit due to last at least 48 hours.

The proposed $1.2 trillion budget includes nearly $397 billion for cohesion funding, or spending that seeks to narrow the economic gap between different EU states, and just over $346 billion for the Common Agricultural Policy, or aid for farmers.

The CAP has historically been a bone of contention among EU member states, with those that don't have a large agrarian sector getting less out of it than those that do. France opposes cuts to agricultural subsidies and is arguing instead for a cut in the UK rebate.

Read more: Peace Prize is a slap on the back for a struggling European Union

Many countries in central or eastern Europe also oppose cuts to cohesion funding, which helps pay for big infrastructure projects.

Spain struggles against austerity

    Just Watched

    Spain struggles against austerity

Spain struggles against austerity 02:55
PLAY VIDEO
Visco hopeful about the eurozone

    Just Watched

    Visco hopeful about the eurozone

Visco hopeful about the eurozone 03:34
PLAY VIDEO

The budget also earmarks $195.6 billion for competitiveness and growth, a major concern as many EU states face record levels of unemployment. Efforts to try to boost growth and job creation are a high priority, but cost a lot of money.

Administration costs for the region are about $80 billion, which includes pensions for EU staff and the cost of schooling for their children. Many EU employees have to relocate for their jobs.

International development aid outside the EU is also a big part of the budget, accounting for some $84 billion. This includes help for some countries who are seeking to join the EU, such as Turkey.

The EU's yearly spending amounts to about 1% of the region's annual economic output.

      Europe's financial crisis

    • German Chancellor Angela Merkel talks with Finance Minister Wolfgang Schaeuble during a session at the Bundestag (lower house of parliament) on June 25, 2013 in Berlin.

      German Finance Minister Wolfgang Schaeuble says the eurozone's problems are not solved, but "we are in a much better shape than we used to be some years ago."
    • IBIZA, SPAIN - AUGUST 21:  A man dives into the sea in Cala Salada beach on August 21, 2013 in Ibiza, Spain. The small island of Ibiza lies within the Balearics islands, off the coast of Spain. For many years Ibiza has had a reputation as a party destination. Each year thousands of young people gather to enjoy not only the hot weather and the beaches but also the array of clubs with international DJ's playing to vast audiences. Ibiza has also gained a reputation for drugs and concerns are now growing that the taking and trafficking of drugs is spiralling out of control.  (Photo by David Ramos/Getty Images)

      Summer could not have come soon enough for Lloret de Mar, a tourist resort north of Barcelona. Despite the country's troubles, it's partying.
    • The Euro logo is seen in front of the European Central bank ECB prior to the press conference following the meeting of the Governing Council in Frankfurt/Main, Germany, on April 4, 2013.

      The global recovery has two speeds: That of the stimulus-fed U.S. and that of the austerity-starved eurozone, according to a new report.
    • The flags of the countries which make up the European Union, outside the European Parliament in Strasbourg, France.

      The "rich man's club" of Europe faces economic decay as it struggles to absorb Europe's "poor people", according to economic experts.
    • Packed beaches and Brit pubs? Not necessarily. Here's what drew travelers to one of Spain's most beautiful regions in the first place

      Spain's economic crisis is in its sixth straight year yet tourism, worth 11% of GDP, is holding its own, one of the few bright spots on a bleak horizon.
    • Photographer TTeixeira captured these images from a May Day protest in Porto, Portugal, Wednesday by demonstrators angered by economic austerity measures. "People protested with great order, but showed discontent against the government who they blame for this economic crisis," she said. "They want the government to resign and the Troika [European Commission, International Monetary Fund and European Central Bank] out of this country."

      As European financial markets close for the spring celebration of May Day, protesters across Europe and beyond have taken to the streets to demonstrate.
    • Croatian Prime Minister Zoran Milanovic delivers a speech in Mostar, on April 9, 2013. Prime Ministers from Bosnia's neighboring countries arrived in Bosnia with their delegations to attend the opening ceremony of "Mostar 2013 Trade Fair".

      As Croatia prepares to enter the 27-nation European Union, the country's Prime Minister says Italy must return to being the "powerhouse of Europe."
    • Anti-eviction activists and members of the Platform for Mortgage Victims (PAH) take part in a protest against the government's eviction laws in front of the Popular Party (PP) headquarters in Mallorca on April 23, 2013.

      Spain's unemployment rate rose to a record high of 27.2% in the first quarter of 2013, the Spanish National Institute of Statistics said Thursday.
    • People protest against the Spanish laws on house evictions outside the Spanish parliament on February 12, 2013 in Madrid, Spain.

      Spain has seen hundreds of protests since the "Indignados" movement erupted in 2011, marches and sit-ins are now common sights in the capital.