By Robin Emmott
BRUSSELS (Reuters) - European Union negotiators will propose a slightly smaller seven-year budget to EU government leaders but stick to the goal of a 750-billion-euro ($846.30 billion) coronavirus recovery fund, a senior EU official said on Thursday.
A more modest 2021-2027 budget, compared to the European Commission's plan released on May 26, aims to persuade a group of fiscally conservative northern member countries led by the Netherlands to drop resistance to parts of the recovery plan.
"It's tactical, we need to find a balance. There's still a long way to go," said the EU official, who spoke on condition of anonymity because of involvement in negotiations.
The official said European Council President Charles Michel would propose a budget of between 1.05 trillion and 1.094 trillion euros. The Commission had proposed 1.1 trillion euros.
Wealthier countries, who are net contributors to the budget, could also preserve their rebates, despite Britain's departure from the EU that has left a funding gap for the remaining 27 member states to fill.
While that could curtail EU ambitions in areas from defence to research, reaching an agreement on the recovery fund is deemed of greater economic and symbolic value for a bloc accused of reacting too slowly to the coronavirus pandemic.
Michel, who chairs EU member state summits, has spoken to EU leaders separately and will make his proposal next week in the hope that governments can agree a deal at a summit later in July, the official said.
Dutch Prime Minister Mark Rutte told Italian newspaper Corriere della Sera he believed a deal could be reached but continued to argue against grants from the recovery fund.
"A system of loans is much more logical," Rutte said. "They are also aid. And based on the Commission's analysis, we know that the sustainability of the debt in Italy and Spain will not be diminished by new loans."
(Additional reporting by James Mackenzie in Rome; Editing by Mark Heinrich)