MEPs told to prepare for budget cuts

The commission had originally proposed to increase the budget to €1,053 billion.

In remarks that could mark the start of a climbdown by the EU executive, Barroso noted that "never before" had the negotiations taken place in "a climate of sharp economic downturn."

Meanwhile, European Council President Herman van Rompuy told MEPs that politicians needed to agree on a "moderation budget."

But he warned EU leaders should not "characterise this process as a fight between rich and poor, between north and south."

He added: "Our budget must properly reflect the fact that there a certain number of things we want the union to do ... and it must be able to do them."

The remarks were met with a frosty response from MEPs from across the ideological divide. Socialist leader Hannes Swoboda accused member states of focusing on the costs of the EU's administration.

"A scapegoat has been found: the administration costs too much. We need an international administration able to carry out its tasks," he said.

MEPs also blamed governments for the failure to agree not only on the longterm budget but also the budget for next year.

Talks are deadlocked on the commission's request in November for an additional €9 billion to cover outstanding bills for the 2012 budget. French centre-right deputy Alain Lamassoure, who chairs the assembly's budget committee, asked "how can EU leaders agree on the long-term budget if they cannot even agree to pay the bills for 2012?"

At the summit last week, Parliament President Martin Schultz insisted that MEPs would block any attempts by governments to cut EU spending beyond the figures set out in the van Rompuy text.

During the summit, Van Rompuy presented leaders with a second budget proposal that would cut overall spending between 2014-2020 to €973 billion, €20 billion lower than for the current budget framework.

After protests by France and Poland, the numbers were rejigged to give more money to agriculture and regional spending.

The EU's flagship growth and jobs projects including the "Connecting Europe" programme aimed at improving the continent's transport and energy network, saw its proposed funding reduced as did EU development aid and foreign affairs.