EU Budget: Leaders 'Close To Deal'

European leaders have agreed the broad lines of a deal on a seven-year budget that would fix total EU spending at 960bn (£820bn) euros.

"We feel pretty confident that we have the framework for a deal," one EU official told reporters.

"The deal is not completely finalised, but we feel sure it will be done today."

The proposal would set a limit of 960bn euros for projects the EU can promise to fund between 2014 and 2020.

But not all those projects will ever be completed, meaning the maximum amount it will ever pay out is 908.4bn euros.

The current spending limit is 942.8bn euros so the actual spending cap looks like it will be reduced by 34.4bn euros.

The breakthrough came at dawn - after 15 hours of intense negotiations between countries in the bloc.

Leaders, including UK Prime Minister David Cameron, will continue negotiating the draft document in the expectation that they can sign off on a final agreement before the weekend.

The deal is expected to strike a balance between the demands of northern European countries, such as Britain and the Netherlands that wanted a belt-tightening EU budget, and countries in the south and east that wanted sustained spending on farming subsidies and much-needed infrastructure.

Sky News Deputy Political Editor Joey Jones, reporting from Brussels, said: "This is the make or break meeting and leaders, including David Cameron, have been given a draft that lays out the budget."

Officials said around 12bn euros (£10.2bn) would be cut from the last proposal, made at a summit in November when an agreement eluded leaders, bringing the headline ceiling for spending down to 960bn over the full 2014-2020 budget.

That represents a decrease of around 3% on the last multi-annual budget - the first time a long-term EU spending plan has seen a net reduction.

While vast in headline terms, in annual terms the budget appropriation amounts to around 140bn euros (£120bn), equivalent to just 1% of total EU economic output.

The draft agreed cuts fell mainly on a new fund for cross-border transport, energy and telecoms projects, which was cut by more than 11bn euros (£9.36bn), and on pay and perks for EU officials - a top target for Britain - which were cut by around 1bn euros (£900m), officials said.

As well as the deal needing to be signed off by all EU leaders today, it must be approved by the European Parliament, an obstacle that could prove difficult.

The European Parliament president has said he will not accept excessive cuts.

Ahead of the summit, France and Britain appeared at sharp odds over the headline numbers, with Denmark, the Netherlands and Sweden lining up on Britain's side and Italy, Spain, Poland and others allied with France. Germany was left in the middle.

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