Strong words and delays mark start of talks

The intrusion of the Irish promissory note issue onto the fringes of yesterday’s EU summit served as an unsettling reminder of the deep economic challenges that still remain for the European Union.

As European leaders finally entered the negotiating room last night, it may also have been an indication of the political imperative to get a deal over the line whatever the internal divisions.

As José Manuel Barroso said on Wednesday, securing a budget deal for Europe this time round is a question of “external credibility”, particularly at a time when markets are beginning to get jittery about Europe amid concerns about political instability in Spain and Italy.

Nonetheless, the mood was combative on the steps of the European Council building in Brussels as leaders began to arrive.

“The numbers are much too high. They need to come down – and if they don’t come down there won’t be a deal,” said British prime minister David Cameron on arrival.

His strong words may have been seen as a riposte to French president François Hollande’s barely veiled criticism of Britain’s rebate earlier this week. But Cameron’s uncompromising stance was not simply political posturing. European Council president Herman Van Rompuy’s decision to delay the summit by some hours was a worrying sign.

Instead of presenting the proposal at 3pm, a series of bilateral meetings took place, including a brief gathering of Van Rompuy, Merkel, Hollande and Cameron, according to one EU offical.

Negotiations last night were centring on how much more Van Rompuy – and, particularly, France – were prepared to cut from the €973 billion ceiling proposed at the last summit, in the face of British demands for more cuts.

Cameron is under pressure from his party to secure a real cut to the European budget. While Van Rompuy is believed to be in favour of cuts of up to €15 billion to “commitments” – payments committed by the budget rather than payments that are drawn down – Cameron was pushing for cuts in actual “payments”, which he argues is a more accurate reflection of budgetary spend.

Securing cuts to payments would also allow the UK to claim it had secured a larger reduction.

“The British want a figure beginning with eight, the Germans a figure beginning with nine,” said one source involved in the negotiations, though ultimately the final result might be a question of interpretation on whether the “payments” or “commitments” figure is used.

For Cameron, at his first summit since his EU speech last month, securing some sort of cut in EU spending may be a political necessity.