EU budget talks suspended in fight for new funds

The crux of the talks is additional funding, so-called top-ups, of €39bn MEPs are requesting for 15 EU programs, such as the Horizon research program and the Erasmus student exchange program.

The German presidency is arguing that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change, pointing out that despite the UK leaving the bloc, the €1.8 trillion package is the largest in the EU's history.

"We had no other choice but to interrupt the meeting", the parliament's negotiating team said in a statement Thursday evening.

"We are waiting for the council to update its negotiating mandate and finally come back with a proposal that takes into account parliament's key demand to improve 15 flagship EU programs, with genuine reinforcements, for the benefit of the citizens", the lawmakers said.

MEPs added that progress has been made in talks so far "with concessions from both sides" on new own resources [new EU-wide levies], and parliament's oversight of the recovery fund.

"No compromise is possible on this point as long as the council rules out raising the MFF [multi-annual financial framework - budget] ceilings or excluding certain expenditure items like the interest for the recovery debt from their calculation," MEPs said.

The German presidency's spokesman Sebastian Fischer said it was "regrettable that the European Parliament missed the opportunity to take the MFF negotiations forward today."

He added in another tweet later: "It needs two to tango. A willingness to compromise is needed on all sides."

The mood has soured among negotiators while the German presidency hoped to wrap up talks by the end of September. The parliament gave itself until the end of October. The aim is to get the funds flowing from next January.

"It makes no sense to talk if there is no real movement. The council needs to decide, if they want a deal," German MEP Rasmus Andresen, who is part of the parliament's negotiating team, said in a tweet.

Toxic issues

The breakdown in talks has come after weeks of growing tensions and accusations of foot-dragging.

The 2021-27 budget needs to be approved by the parliament, but it is negotiated by member states' governments without parliament's direct involvement.

Earlier this week, German EU ambassador Michael Clauss in a letter told MEPs "member states are extremely hesitant to consider any further increases in volume coming on top of the historic deal in July".

He said that increasing the budget ceilings would require another meeting of EU leaders, which could put the whole package in danger.

Class added that an increase of "upper single digit" billion euros "might be possible".

The German ambassador also said that the rule-of-law conditionality linked to the EU budget cannot be tuned to the parliament's liking.

The issue has become politically toxic among member states themselves, and vis-a-vis the parliament. MEPs want the disbursement of EU funds to be suspended in case of broader rule-of-law issues, not only in case of fraud or corruption.

"It is clear that this will not be and cannot be a financial sanctions mechanism for member states which do not respect the rule of law," Clauss wrote, arguing that the Article 7 sanctions procedure is already in place to deal with those concerns.

In his response, MEP Johan Van Overtveldt, who is leading the parliament's negotiating team, said the council needed to compromise.

"I regret to see that, despite six trilateral dialogues, the council has not moved and there is nothing new in your proposal," he told Clauss.

After Thursday's talks MEP Margarida Marques called the German presidency's proposal "a provocation". "A single digit does not meet EU challenges and citizens' expectations," she added in a tweet.

Talks will resume next Wednesday, with the EU commission tasked with juggling numbers until then.