European Council President Herman Van Rompuy has chosen not to present a new budget compromise to EU leaders at a summit after sharp splits emerged between key nations, EU diplomats have told Reuters.
"There will be no new proposals [from Van Rompuy]," one source said on condition of anonymity. The impasse could mean that no new proposal is presented at all on the first night of the two-day summit, a second source said.
Van Rompuy had been expected to present a revised budget plan to leaders this afternoon, but that was delayed by more than five hours as meetings among EU leaders showed deep differences in their positions.
The Prime Minister spoke to the European Council president Herman Van Rompuy and his Irish and Czech counterparts on the phone last night to try to work towards a deal on the EU budget.
A Number 10 spokesman said Mr Van Rompuy updated David Cameron on his discussions with other leaders.
The PM set out his view that EU spending cannot be discussed without reference to cuts back here in Britain.
Downing Street says he believes that Mr Van Rompuy is taking a step in the right direction, but believes further cuts can be made.
On the issue of the UK rebate, Number 10 confirmed it was in the proposals set out by the European Commission and revised by Van Rompuy, but he reiterated that it was not up for negotiation, adding: "We will protect our rebate. We think it's fully justified."
As far as Europe is concerned my message is straightforward - we are determined to stay the course, we will pursue our comprehensive strategy to decrease deficits and debts and to return to growth and job creation based on structural reforms, investments and trade.
– Herman Van Rompuy, President of the European Council