No deal in sight as "Frugal Four" stamp down on EU budget

No deal in sight as 'Frugal Four' stamp down on EU budget

Denmark, Austria, Sweden and the Netherlands dug in their heels over the next European Union budget, insisting it cannot top 1% of economic output, to leave the EU no closer to a deal on Friday after all-night talks.

Expectations for a breakthrough were low as the 27 national leaders reconvened on Friday. They had spent a day and a night in talks that failed to bridge divisions between richer and poorer nations over the size of the next budget and what to spend it on.

"I don't think we are going to reach an agreement," said Danish Prime Minister Mette Frederiksen.

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The Union flag is taken down outside the European Parliament in Brussels, Belgium, ahead of the UK leaving the European Union at 11pm on Friday.
A member of protocol carries the folded Union flag past the EU flag after it was removed from outside of the European Parliament in Brussels, Friday, Jan. 31, 2020. As the United Kingdom prepared to bring to an end its 47-year EU membership, the bloc's top officials on Friday pledged to continue playing a prominent role despite the loss of a powerful affiliate. (AP Photo/Francisco Seco)
A member of protocol carries the folded Union flag after it was removed from outside of the European Parliament in Brussels, Friday, Jan. 31, 2020. As the United Kingdom prepared to bring to an end its 47-year EU membership, the bloc's top officials on Friday pledged to continue playing a prominent role despite the loss of a powerful affiliate. (AP Photo/Francisco Seco)
The Union flag is lowered and removed from outside of the European Parliament in Brussels, Friday, Jan. 31, 2020. As the United Kingdom prepared to bring to an end its 47-year EU membership, the bloc's top officials on Friday pledged to continue playing a prominent role despite the loss of a powerful affiliate. (AP Photo/Francisco Seco)
Pro-Brexit supporters gather in Parliament Square, London, as the UK prepared to leave the European Union at 11pm UK time. Picture date: Friday January 31, 2020. Photo credit should read: Matt Crossick/Empics
Brexit Party leader Nigel Farage celebrates during a rally in London, Friday, Jan. 31, 2020. The U.K. officially departs the EU at 11 p.m. local time, midnight in Brussels (2300 GMT, 6 p.m. EST). The move comes 3½ years after the country voted by a margin of 52%-48% to walk away from the club that it had joined in 1973. (AP Photo/Frank Augstein)
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A member of protocol removes the Union flag from the atrium of the Europa building in Brussels, Friday, Jan. 31, 2020. As the United Kingdom prepared to bring to an end its 47-year EU membership, the bloc's top officials on Friday pledged to continue playing a prominent role despite the loss of a powerful affiliate. (Olivier Hoslet, Pool Photo via AP)
Großbritannien hat die EU verlassen. Während Hunderte Brexit-Anhänger in London jubelten, wurde in Schottland und Nordirland protestiert.
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A countdown to Brexit timer and the colors of the British Union flag illuminate the exterior of 10 Downing street, the residence of the British Prime Minister, in London, England, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Kirsty Wigglesworth)
The Union flag is folded and removed after being lowered from outside of the European Parliament in Brussels, Friday, Jan. 31, 2020. As the United Kingdom prepared to bring to an end its 47-year EU membership, the bloc's top officials on Friday pledged to continue playing a prominent role despite the loss of a powerful affiliate. (AP Photo/Francisco Seco)
Brexit supporters trample on a European Union flag during a rally in London, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Frank Augstein)
A projection appears on a cliff in Ramsgate, southern England, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Matt Dunham)
Brexit supporters celebrate during a rally in London, Friday, Jan. 31, 2020. Britain leaves the European Union after 47 years, leaping into an unknown future in historic blow to the bloc. (AP Photo/Frank Augstein)
A projection appears on a cliff in Ramsgate, southern England, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Matt Dunham)
French gendarmes walk by as British living in France attend a gathering to express their sprit of Europe despite the withdrawal Brexit agreement and the UK's departure from the EU, in a street closed to the British Embassy in Paris, Friday, Jan. 31, 2020. Britain leaves the European Union after 47 years, leaping into an unknown future in a historic blow to the bloc. (AP Photo/Francois Mori)
An image of the clock face of 'Big Ben' is projected onto the exterior of 10 Downing street, the residence of the British Prime Minister, in London as Britain left the European Union, Friday, Jan. 31, 2020. With little fuss and not much fanfare, Britain left the European Union on Friday after 47 years of membership, taking a leap into the unknown in a historic blow to the bloc. (AP Photo/Kirsty Wigglesworth)
An image of the clock face of 'Big Ben' is projected onto the exterior of 10 Downing street, the residence of the British Prime Minister, in London as Britain left the European Union, Friday, Jan. 31, 2020. With little fuss and not much fanfare, Britain left the European Union on Friday after 47 years of membership, taking a leap into the unknown in a historic blow to the bloc. (AP Photo/Kirsty Wigglesworth)
A Brexit supporter celebrates during a rally in Parliament square in London, England as Britain left the European Union on Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Alberto Pezzali)
Anti-Brexit protesters gather outside the Scottish parliament in Edinburgh, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Scott Heppell)
Protesters from the campaign group Border Communities Against Brexit take part in a demonstration in Carrickcarnon on the Irish border, Ireland, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Peter Morrison)
Protesters from the campaign group Border Communities Against Brexit take part in a demonstration in Carrickcarnon on the Irish border, Ireland, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Peter Morrison)
Brexit supporters gather during a rally in London, Friday, Jan. 31, 2020. The U.K. is scheduled to leave the EU at 23:00 GMT Friday, the first nation in the bloc to do so. (AP Photo/Frank Augstein)
Britain's Union flag is lowered form its pole outside the European Parliament Friday Jan. 31, 2020, in Strasbourg, eastern France. The U.K. is scheduled to leave the EU at 23:00 GMT Friday, the first nation in the bloc to do so. (AP Photo)
Brexit supporters pose with the Union Jack at the Cenotaph, in London, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum.(AP Photo/Alberto Pezzali)
Rain drops are seen on the umbrella of a Brexit supporter during a rally in London, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Frank Augstein)
Passengers arrive to embark on the last Eurostar train of the day at Gare du Nord Station in Paris to go to St Pancras International train station in London, Friday, Jan. 31, 2020. The U.K. is due to leave the EU on Friday, the first nation to leave the bloc since its inception. (AP Photo/Francois Mori)
The Union flag is lowered and removed from outside of the European Parliament in Brussels, Friday, Jan. 31, 2020. As the United Kingdom prepared to bring to an end its 47-year EU membership, the bloc's top officials on Friday pledged to continue playing a prominent role despite the loss of a powerful affiliate. (AP Photo/Francisco Seco)
Anti-Brexit protesters gather outside the Scottish parliament in Edinburgh, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Scott Heppell)
The five-year old Elisa Saemann, left, and her seven-year old sister Katie hold a placard during a rally by anti-Brexit protesters outside the Scottish parliament in Edinburgh, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Scott Heppell)
A Brexit supporter holds a British flag during a rally in London, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/(AP Photo/Alberto Pezzali)
Anti-Brexit protesters gather outside the Scottish parliament in Edinburgh, Friday, Jan. 31, 2020. Britain officially leaves the European Union on Friday after a debilitating political period that has bitterly divided the nation since the 2016 Brexit referendum. (AP Photo/Scott Heppell)
A projection by the Mayor of London’s office displaying 'London - everyone welcome' is seen at Piccadilly Circus in London, Britain January 31, 2020. REUTERS/Dylan Martinez TPX IMAGES OF THE DAY
Brexit Party leader Nigel Farage speaks to the media through a fence as he celebrates Britain leaving the EU on Brexit day, at Parliament Square in London, Britain, January 31, 2020. REUTERS/Henry Nicholls
A person pours a beer on the European Union flag lying on the ground and covered with a mud on Brexit day in London, Britain January 31, 2020. REUTERS/Henry Nicholls
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Her Romanian colleague, Klaus Iohannis, said another summit of EU leaders would be needed to break the deadlock. Czech Prime Minister Andrej Babis channeled frustration, saying the leaders "can go straight home" if the four frugals do not budge.

Some EU countries want extra funding to match new ambitions to fight climate change and manage migration, some want a continued focus on development and farm aid, and some are pushing for greater realism in recognising the 75 billion-euro ($81 billion) fiscal shortfall left by net contributor Britain's departure from the EU.

A baseline proposal to cap the budget - which will run from 2021 to 2027 - at 1.074% of EU gross national income, or 1.09 trillion euros ($1.18 trillion), faced criticism from all quarters.

Dubbed the Frugal Four, the bloc's wealthy net contributors want a limit of 1% and refuse to pay more to make up for the loss of Britain's fees. Their less-developed peers want to keep generous aid coming.

After an initial session of all 27 leaders on Thursday afternoon, they broke for separate face-to-face meetings that went through the night and until 0600 GMT on Friday.

"The bilaterals took forever. But it seems things have not moved, the frugals keep on insisting on their position," one diplomat said on Friday morning.

An EU official confirmed: "The position of the frugals has not changed an inch ... so there is not much to go on."

A French diplomat echoed the sentiment: "I'm not very optimistic. Because of the frugals."

EU budget

Long negotiations on the cards

EU leaders have until the end of the year to agree, so chances of an early compromise appear low.

Beyond the size of the budget, the other fight is what to spend it on. The poorer eastern and southern nations want to hold on to development aid. They are backed by France, Ireland and others in seeking to uphold major farm subsidies.

But Germany, the Netherlands and others want to shift funds towards new priorities, including combating climate change, managing migration and expanding the digital economy.

The Germans and Dutch are also leading a small group who want to preserve rebates that reduce their payments to the current 2014-20 budget. Every other EU country is against that.

Poland and Hungary - where nationalist and eurosceptic governments stand accused of flouting democratic standards - refuse to link EU aid to upholding the rule of law.

"If we are so far apart, there is no basis for discussion," Babis said.

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