EU negotiators agree 2012 'austerity' budget

The European Parliament had been pushing for a rise in spending of 5.2 percent, while the European Commission had wanted an uptick of 4.9 percent.

Blocked by the UK and Germany in particular, who argued that any increases could not top the rate of inflation, the commission grumbled that the agreement represents a threat to its ability so meet its commitments.

"This is clearly an austerity budget, as most member states are in the midst of a serious financial crisis," said EU budget commissioner Janusz Lewandowski,

"There is now a serious risk that the European Commission will run out of funds in the course of next year, and will therefore not be able to honour all its financial obligations towards beneficiaries of EU funds," he added.

MEPs for their part argued that the additional spending would go some way to filling the gap left by cuts at the national level.

The European strategy of austerity has been augmented slightly as the economies of Europe appear increasingly on the verge of tipping over into a second recession, with Brussels now pushing for those states that have a capacity to spend extra to do so, although many economists argue that this is insufficient to ward off contraction.

The member state negotiators did however in return for the trim budget increase next year, concede a €200 million increase to the EU’s current budget.

The conservative bloc in the parliament said the agreement was a good deal at a time of economic difficulties.

"The agreement represents a strong signal for Europe. This agreement shows the will of the European institutions to send a message of hope and responsibility to the citizens, taking into account the current difficult times of crisis," said MEP Giovanni La Via, the spokesman for the European People’s Party on the 2012 budget negotiations.

The Greens meanwhile, who have critiqued Europe’s austerity strategy elsewhere, said the agreement was disappointing.

“This deal represents a scaling back of ambition for Europe and for an EU response to the crisis, mirroring the narrow-minded austerity focus of EU governments at national level, said the Green’s budget spokeswoman, Helga Trüpel. “The EU budget is a key instrument for European investment and should be a key instrument for stimulating European economic recovery.”

The battle over the 2012 budget is not over, however, as the full sitting of the parliament and the Council of Ministers must still endorse the deal their negotiators have cobbled together.

And as tough as this fight has been, it is just a warm-up for a much bigger row over the bloc’s seven-year budget covering the period 2014-2020.