MEPs agree 5 percent cuts in bid to break budget deadlock

All budget headings, apart from administration, which covers the costs of the EU institutions, are set to be cut. However, EU cohesion funds, which includes structural funding to the bloc's poorest regions, face the deepest cuts of over €7 billion.

Under the proposal drafted by Danish centre-left MEP, Anne Jensen, spending on digital agenda policies and humanitarian aid would be slightly increased. Jensen also wants to increase funding for the Frontex agency, which deals with EU border control, in response to the recent tragedy off the coast of Lampedusa which left over 360 dead.

However, the parliament's plans, which would see a 5 percent cut in spending, are still €855 million higher than the level demanded by EU governments.

Speaking after the vote Alain Lamassoure, the French chairman of the Parliament's budgets committee, told reporters that the assembly was "not going into these negotiations on the back foot."

He noted that "virtually all" of the amendments endorsed by Parliament had the support of at least 3/4 of MEPs. Parliament's position was approved by 480 votes, with 119 against and 86 abstentions.

The 2014 budget forms part of what Lamassoure described as a complicated "jumbo" package which lawmakers need to agree in the coming weeks. But he insisted there was "absolutely no risk of a US-style shutdown" if agreement could not be reached.

On Thursday (24 October) MEPs will sign off on an emergency request for €2.7 billion of extra cash to plug a shortfall in revenue from customs duty, in a bid to solve a cash-flow problem that would leave the commission unable to pay its bills.

All invoices received by the EU executive by the end of October must have been paid for by the end of the year. But invoices received in November and December, which the commission estimates could be between €5-10 billion, could be rolled over into 2014.

Addressing MEPs on Tuesday (22 October), budget commissioner Janusz Lewandowski thanked MEPs for helping the EU executive deal with what he described as the "accumulation of problems resulting from artificial under-budgeting."

But lawmakers are no closer to sealing a deal on the EU's next seven year spending cycle which starts in January 2014.

Lamassoure re-affirmed that deputies would only sign off on the 2014-2020 budget plan once governments have provided an additional €3.9 billion, promised back in June, to cover outstanding bills until the end of the year.

The parliament is also waiting for member states to cough up around €400m for German, Austrian and Czech citizens affected by recent floods.

"If we don't get more movement from Council we are quite prepared to defer the vote again until December," he said.