France and Poland main winners in first round of EU budget talks

The draft paper keeps to the same overall top-line figure of 972 billion stated in the proposal sent to national capitals last week, equivalent to 1.01% of GNI.

However, in a bid to pacify member states, it redistributes the cuts between budget headings.

Agriculture is the main beneficiary with an €8 billion increase, while intensive lobbying by the 15-nation "Friends of Cohesion" group led by Poland saw it rewarded by a €10.6 billion increase in funds.

The EU's own projects aimed at promoting jobs and growth are set to be the main losers from the new proposal.

The flagship Connecting Europe Facility, which focuses on infrastructure projects to develop Europe's transport, energy and digital networks would be cut a further €5 billion to €41 billion.

The Galileo space programme would also lose an extra €350 million. The irony of EU leaders cutting back on their own growth strategy, just months after agreeing on a €60 billion ' growth and jobs pact in June, was not lost on officials.

Meanwhile, the "Europe in the world" heading, which covers spending in Croatia and other candidates for EU membership as well as EU aid to the world's poorest countries is to suffer a further €5 billion cut.

The move is likely to deepen concerns of NGOs.

Commission President Jose Manuel Barroso earlier said that development aid could be among the biggest losers from the negotiations. Despite being in the firing line of a handful of the net contributor countries, led by the UK and the Netherlands, the draft leaves administrative spending in the EU institutions untouched.

As expected, UK Prime Minister David Cameron put forward a more ambitious cuts programme with a €890 billion budget. However, EU officials expect Cameron to accept a compromise based on the latest draft.

For his part, European Parliament President Martin Schultz told reporters that a comprehensive budget agreement is unlikely at this summit.

"There seems to be very little room from manoeuvre," he commented, adding that "what is probable is that there will not be an agreement."

Schultz also reiterated that the assembly would oppose any budget lower than the €972 billion Van Rompuy headline figure. "There is no chance the European Parliament will go along with this,' he said.

With the one-to-one "confessional' meetings between leaders and European Council President Herman van Rompuy delaying proceedings, the first formal session of negotiation lasted little over an hour, with the summit negotiations set to resume at midday on Friday (23 November).

If the summit breaks off without agreement, EU leaders are likely to come together in early in spring next year. However the later the deal, the higher the timetable pressure to get all the corresponding pieces of spending legislation agreed with parliament by end of 2013.