European Union leaders deadlocked over the bloc's nextseven-year budget, adding to the quarrels between rich and poorcountries that have stymied the response to the euro debtcrisis.

France defended farm subsidies, Britain clung to a rebate andDenmark demanded its own cash-back guarantee, while eastern andsouthern countries said reduced financing for public-works projectswould condemn them to lag behind the wealthier north.

The conflicts at a Brussels summit offered a 27-nationre-enactment of the fury and acrimony that has marked the fiscalcrisis in the 17-nation euro region, and predictions abounded thatit would take another summit next year to clinch a deal.

“The positions are still quite far apart,” German ChancellorAngela Merkel told reporters as the meeting resumed today. “And ifwe need a second stage, then we will take the time for it.”

At stake is a spending plan for the years 2014-2020 that wouldtotal about 1 percent of EU-wide gross domestic product. While thatsum is paltry compared to the average 50 percent of GDP that eachcountry spends inside its borders, the political resonance is farlarger.

Wealthier countries such as Germany, the U.K., Denmark, Swedenand the Netherlands have banded together to cut what they pay in tothe budget, pounding away at the original proposal of 1.033trillion euros ($1.3 trillion) that came out in mid-2011.

By the time the summit started yesterday, the figure on thetable was 973 billion euros. Overnight talks shaved the number tothe neighborhood of 950 billion euros and triggered a battle toallocate the cuts among the host of subsidy programs.

Merkel, Luxembourg Prime Minister Jean-Claude Juncker andAustrian Chancellor Werner Faymann floated the prospect of anothersummit in January or February to nail down a deal. In the absenceof an accord by late 2013, the EU would roll over its annualbudget.

“We are really not there yet,” Dutch Prime Minister Mark Ruttesaid. “There are huge differences.”

The euro was little changed, trading at $1.2899 at 1:15 p.m. inBrussels, compared to $1.2880 late yesterday. Greek bonds declined,snapping 10 days of gains, while debt of Portugal, Spain andIreland slipped. The Euro Stoxx 50 index dropped 0.1 percent to2,531.59.

New Proposal

Leaders met in shifting configurations with each countrydetermined to pay less in or get more out. EU President Herman VanRompuy was set to release a new proposal this afternoon and gaugereactions in the evening.

Led by Poland, defenders of EU financing pointed out thatspending at the European level goes further than money that stayswithin national borders, since EU subsidies back internationalprojects like pipelines, bridges and airports.

European Parliament President Martin Schulz countered thewealthier countries' insistence on paying less with the contentionthat it is cheaper for them to promote European projects, sincecontracts in Latvia or Slovenia go to companies in places likeGermany and Sweden.

“Every euro invested by the EU attracts an average of between 2and 4 euros in additional investment,” Schulz told the leaders.“The EU budget is not a zero-sum game in which one country winswhat another loses. Synergies are generated which benefit the netcontributors as well.

At a time of austerity at home, that argument failed to swayleaders like U.K. Prime Minister David Cameron. Cameron zeroed inon the salaries of the EU's more than 50,000 civil servants, andsaid a discussion of a rebate won by Margaret Thatcher in 1984 isoff-limits.

“It isn't the time for moving money from one part of the budgetto another,” Cameron said. Cuts are “what's happening at home andthat's what needs to happen here.”

Using language out of the postwar era, when food shortages ledto the setup of programs to promote beef, cereal and dairyproduction, French President Francois Hollande defended farm aid asa guarantor of “food security.”

Farm subsidies make up over a third of the budget. Frenchfarmers picked up 9.5 billion euros in European subsidies in 2011,the biggest single share. Spain, Greece, Italy, Ireland and Polandalso number among the defenders of farm support.

“The reduction is still too large,” Hollande said of a newproposal that would restore 8 billion euros of a proposed 25billion-euro farm-aid cut. He countered Britain's refund claims,saying “they can't ask for a smaller budget and a largerrebate.”

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