EU agrees historic cut to budget after tough talks

European Union leaders agreed the first ever cut in the bloc's budget after all-night talks driven by sharp differences over priorities for the next seven years.

"Deal done!" summit chair and EU President Herman Van Rompuy said on Twitter after more than 24 hours of tough talks between the bloc's 27 heads of state and government.

"There's a lot in it for everybody", he added a short time later, while emphasising that the 2014-2020 austerity budget embodied "a sense of collective responsibility from European leaders."

Pushed by British Prime Minister David Cameron, who said the EU could not increase spending while many of its members were forced to slash their national budgets, leaders agreed a cut of around three percent compared with the 2007-13 budget.

"Every previous time these multi-year deals have been agreed, spending has gone up. Not this time," Cameron said.

It was "a good deal for British taxpayers", he said, adding that for a growing eurosceptic audience at home, it also "shows that working with allies, it is possible to take real steps towards reform in the European Union."

The British leader's stance had put him on a collision course with countries such as France and Italy, which wanted increased EU investment to boost growth and curb record unemployment.

French President Francois Hollande nonetheless deemed the final figures on the bloc's budget "a good compromise."

"It was an agreement that as usual was long to produce, but which I believe is a good compromise," he said.

Significantly, the EU's farm support programme, of which France is a major beneficiary, and Cohesion Funds, used to help new member states catch up with their peers, were not cut further from figures Van Rompuy submitted to a failed summit in November.

German Chancellor Angela Merkel said the deal "was worth the effort" and she "was glad that everyone showed the needed willingness to compromise."

Greek Prime Minister Antonis Samaras was also upbeat, and said his country would receive more than 16 billion euros from the budget.

"We are extremely pleased, because we managed to achieve the best (result) possible," Samaras said in a statement.

Greece obtained "much more, even, than what seemed realistically feasible at the beginning of the negotiations," he added.

Under the accord, 2014-20 actual spending, or "payments" in EU jargon, was set at 908.4 billion euros ($1.2 trillion), with an absolute ceiling of 960 billion euros for spending "commitments" to the budget.

That is just one percent of the bloc's gross domestic product (GDP) and is less than the figure of 973 billion euros that Cameron and allies such as the Netherlands had rejected in November.

In the EU budget process, commitments refer to the maximum amount that can be allocated to programmes, while actual spending or "payments" is usually lower because projects are sometimes delayed or dropped.

Originally, the European Commission had sought a 5.0 percent increase in commitments to 1.04 trillion euros ($1.4 trillion).

The final agreement, however, is only part of the battle because there is another important hurdle to clear -- the European Parliament must approve the budget, and lawmakers are in no mood for austerity.

Since late 2009 the parliament has acquired more decision-making powers within the EU, must now live up to its responsibilities and approve the budget, Van Rompuy said.

But the heads of the four largest groups in Parliament, which is to vote on the budget in July, said they could not accept it in its current form as it would not help boost the struggling EU economy.

"The real negotiations will start now with the European Parliament. We will maintain our priorities which we have clearly stated many times," they added.

Cameron, who last month risked isolating himself by proposing to hold a referendum on Britain's membership of the EU, had insisted Thursday that the budget figures be cut.

"When we were last here in November, the numbers that were put forward were much too high. They need to come down -- and if they don't come down, there won't be a deal," Cameron had said.

  • Driving a $900,000 Porsche 918 Spyder to the future 3 hours ago
    Driving a $900,000 Porsche 918 Spyder to the future

    It’s more than just its inherent speed, or the whooshing noise that fills the cabin like a school choir jamming with James Hetfield. It’s what it represents in an industry full of skeptics. It’s a portal into the future – a time capsule left by some mad scientist born decades too soon. It’s something that shouldn’t exist. And yet it does.

  • 919 reasons to love: Flickr photo of the day 4 hours ago
    919 reasons to love: Flickr photo of the day

    We've brought you the drive video of the $900,000 Porsche 918 Spyder -- an 887-hp hybrid supercar with two electric motors working in harmony with a big 4.6-liter V-8. But how about this? Porsche's hybrid Le Mans racer -- the 919 Hybrid, sent to us by Kevin Leech. Get on board with electrification, folks. Because it's taking over the world.

  • Watch a man drive his three-wheeled Mustang along a Texas highway 10 hours ago
    Watch a man drive his three-wheeled Mustang along a Texas highway

    Some things in life are hard to explain, like why a dentist insists on asking you questions when you clearly can't respond. Or why we call pants "a pair" even though it's just one. Or how about this puzzler: Why a person would drive their Mustang along a Texas highway despite it missing a wheel? Life is full of little mysteries, I guess.

  • Singaporeans slam NEA's $120 licence requirement for tissue sellers
    Singaporeans slam NEA's $120 licence requirement for tissue sellers

    Singaporeans on social media reacted angrily to news that tissue sellers at hawker centres and street corners are being required to pay for an annual licence.

  • Heartbreaking texts from students on sinking S. Korea ferry
    Heartbreaking texts from students on sinking S. Korea ferry

    Heart-wrenching messages of fear, love and despair, sent by high school students from a sinking South Korean ferry, added extra emotional weight Thursday to a tragedy that has stunned the nation. Nearly 300 people -- most of them students on a high school trip to a holiday island -- are still missing after the ferry capsized and sank on Wednesday morning. Mom, I love you," student Shin Young-Jin said in a text to his mother that was widely circulated in the South Korean media.

  • Indonesia’s armed forces chief says “no apology” for warship’s name
    Indonesia’s armed forces chief says “no apology” for warship’s name

    General Moeldoko, the head of Indonesia’s Armed Forces, has clarified that he had not apologised for the naming of a warship after two Indonesian marines who had been involved in the 1965 MacDonald House bombing in Singapore.