Schulz issues ultimatum on EU budget

He added that he had told the Irish EU presidency, heading up the budget negotiations, that they "must fill the gap between the commitments and the payments for 2013. It is a precondition of the European Parliament to open negotiations on the [long term budget]."

The EU's annual budget for this year has a shortfall of between €16 billion and €17 billion. It is the gap between the payout commitments made by member states (around €148bn) and the actual budget of between €132 billion and €133billion.

"Deficits are forbidden at the European level," said Schulz.

The German politician also repeated earlier warnings that MEPs will next month reject the EU long term budget (2014-2020) deal of €960 billion recently agreed by governments because it is not modern enough.

"It is most likely that an overwhelming majority of members of the European Parliament will say no to the budget as it is for the time being," he said.

He criticised governments for agreeing a budget that would see payments in 2020 at the same level as payments in 2005.

Schulz noted that "everyone [member states] got what they wanted" which meant there were no changes to budget-gobbling policies such as farm subsidies and cohesion policy.

Parliament has long been annoyed that its wishes have been ignored by member states. The vote on 13 March, in which the parliament can either reject or agree the final sum, will give it the chance to vent this anger and then start bargaining.

However, Schulz left the door open, noting that MEPs will not be voting "definitively no" to the longterm budget.

"Parliament will refuse the draft decided by the 27 heads of state and government but we will not refuse an MFF [multi-annual financial framework]," he said.

"We want to negotiate our major points," said Schulz, with the parliament keen to have more flexibility between budget lines and some wording on EU tax, or own resources. Compromises to date on some of these issues were not satisfactory, he added.

He also indicated that MEPs would not have difficulty defending their position before citizens - many of whom are feeling the effects of tightened national spending - as parliament has a responsibility to invest in the future.

"We want to spend money on a modern budget," he said.

Reacting to the parliament president, Eamon Gilmore, deputy Irish prime minister and in charge of EU budget negotiations, said the March vote will be followed by a "process of deep negotiation."