EU's Van Rompuy proposes budget compromise in tight talks

By Ilona Wissenbach and Charlie Dunmore

BRUSSELS (Reuters) - The European Union's chief budget negotiator proposed further modest cuts to the bloc's long-term spending plan on Thursday to try to bridge deep divisions among member states on how nearly 1 trillion euros of funds should be spent.

European Council President Herman Van Rompuy, who chairs EU summits, delayed the start of negotiations by more than five hours and initially withheld his budget plan because he felt governments remained too far apart to strike a deal.

The budget, which covers spending for 2014-2020, tackles everything from agricultural subsidies to scientific research, roads and infrastructure, foreign aid and development assistance and is fought over bitterly, often along national lines.

While vast as a headline figure, it is relatively small in terms of annual GDP, amounting to around 1 percent of the EU's total output, or around 150 billion euros a year.

European Parliament President Martin Schulz said Van Rompuy had suggested a slight cut in the headline amount that can be pledged for spending, known as commitments, but a deeper cut to payments, the maximum sum that can actually be spent.

"President Van Rompuy set out a compromise which would involve spending of 960 billion - we are talking about commitment appropriations here - whereas payment appropriations would just run to about 910-913 billion euros," he told a news conference, saying he didn't like the proposal.

The budget must be unanimously supported by all member states and approved by the parliament to become law, making the parliament's position a factor in negotiations.

That further complicates deal-making on a package that often divides northern European countries that want to keep spending tight and southern and eastern European states that want to maintain funding for infrastructure and farming.