22/11/2012 01:36 GMT | Updated 22/11/2012 03:51 GMT

David Cameron Set For EU Budget Battle

David Cameron insisted today the proposed rise in European Union spending was "quite wrong" as he arrived in Brussels for marathon budget negotiations.

The Prime Minister said he would be fighting "very hard" for a good deal for British taxpayers and to keep the rebate negotiated by Margaret Thatcher in the 1980s.

"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.

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

The Prime Minister is the first in line this morning for a meeting with European Commission president Jose Manuel Barroso and European Council president - and summit chairman - Herman Van Rompuy.

Other EU leaders will be ushered in throughout the day to see the two presidents as part of an unusual pre-summit effort to avoid deadlock when the summit gets under way tonight over dinner.

David Cameron begins marathon EU budget negotiations on Thursday

Only one item is on the agenda - the size of the EU's budget for 2014-2020.

Cameron wants at least a real-terms freeze in EU spending, if not actual cuts, in line with austerity savings being made in most EU national treasuries.

But he will insist today that Britain's EU budget rebate - worth nearly £3bn a year off the UK's annual contributions to Brussels - is not up for trimming back as part of any deal.

As Cameron prepared for his breakfast encounter, a pre-summit compromise was already on offer - a seven-year budget "envelope" of 940bn euros (£756bn) for 2014-2020 - a cut of nearly 5bn euros (£3.8bn) compared with the 2007-2013 ceiling.

The move was seen in Downing Street as a move in the right direction - although the "cut" is in a spending ceiling which officials say has not been reached.

It is also above the 886bn euros (£712bn) originally pitched by the Treasury as in line with the real-terms freeze Cameron wants.

But in the complex world of EU budget economics, with financial "commitments" different from "payments", a range of calculation options, rebates for some countries, and contributor and beneficiary member states, Cameron and his colleagues have plenty of scope for claiming summit success.

David Cameron is the first in line this morning for a meeting with European Commission president Jose Manuel Barroso

The Prime Minister's allies for budget belt-tightening including Sweden and the Netherlands, who have both demanded hefty financial cuts. Germany, France, Finland and Austria want to freeze the maximum Brussels can draw from member states every year - leaving plenty of scope to argue over the actual spending figures within the ceiling.

And 15 countries, led by Poland, are backing budget increases, - not least to preserve the scale of cash aid they receive as "net beneficiaries" from the EU kitty.

"The Prime Minister wants an agreement, he is looking for an agreement," said one UK official.

"But he wants the EU budget to reflect what is happening in member states - and he wants the best deal for British taxpayers."

That includes a shake-up in EU spending priorities, cuts in the agriculture spending and subsidies - fiercely defended by France - and cuts in EU staff levels and pay and perks, in line with national civil servants.

But European Commission still insists that a spending increase is necessary - a 5.9% hike compared with 2007-2013, not least to pay for polices already agreed by member states.

"EU governments are telling us to do more, including financing new policies, funding EU expansion - Croatia is a member from next June, and creating jobs and growth," said one EU official. "We therefore need a workable budget and if there have to be cuts, they should be in areas that are not contributing to the jobs and growth agenda we need."

A deal could take days to secure. "Mr Van Rompuy will keep the leaders talking as long as it looks likely that there can be agreement," said one official.

"But he will not want to keep them at the negotiating table all weekend if the result is going to be a failure. There is the credibility of the EU to consider - better to end early and return another day than end in complete disarray."

Last night Jose Manuel Barroso spoke out against the lack of "real debate" on the budget, reports the Daily Mail.

"The European budget is not, as is sometimes claimed, a budget for Brussels or Strasbourg.. It is a budget for investing in the economy of all member states.

"I have listened to the preparatory discussions, which all focus on how to make cuts. There is no real debate on the quality of investment – it is just cuts, cuts, cuts."

Cameron has said he will veto the financial package if it is not a good deal for Britain, ater Tory backbenchers inflicted a stinging defeat on the coalition over the EU budget.

Rebels joined Labour in rejecting a plan to go along with an inflation-level EU budget increase earlier in November.

Last December David Cameron has been criticised for "isolating" the UK from the EU after he vetoed a crucial treaty designed to deal with the eurozone crisis because it was "not in Britain's national interest".