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 president of the European Council Herman Van Rompuy has warned that David Cameron's strategy of repatriating powers from the EU would damage the union and the eurozone.
In an interview with the Guardian, he said: "If every member state were able to cherry-pick those parts of existing policies that they most like, and opt out of those that they least like, the union in general, and the single market in particular, would soon unravel."
He said that Britain has gained "tremendously" from being part of the single market and said he did not want to see "a friend walk off into the desert".
The Prime Minister has held a meeting with the European Commission president Jose Manuel Barroso and European Council president 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.
Herman Van Rompuy, President of the European Council said: "We will do whatever is needed to guarantee the financial stability of the eurozone."