EU leaders to kick off post-Brexit budget debate

The European Commission in its preliminary proposals argued the need for a larger EU budget than current levels, amounting to at least 1.1 percent of the bloc's gross national income (GNI).

That means more contributions from other member states than before. Germany's expected next government said in its coalition agreement it was willing to pay more.

However, other net contributor countries, such as the Netherlands, Austria, and Nordic member states argue that a smaller EU needs a smaller budget.

One of the key battlegrounds will be finding a compromise on the overall figure.

"The majority of member states would support the idea to increase the budget, but those sceptical are very determined, more determined those who support an increase," said one senior EU official.

Leaders are not expected to agree on the size of the budget for now, but should give a direction for the EU commission's budget proposal, which is to be revealed on 2 May.

Cuts however will have to be made to two key policy area, which make up 70 percent of the total EU budget: agriculture and cohesion policy, which is aimed at creating investment for poorer regions.

Leaders will also discuss new priorities.

EU countries want to work more closely together on defence, security and migration, and the commission argues that for these policies to be effective, substantial new money has to be added to the budget.

"New policies require more money, we cannot do more with less," said an EU diplomat.

An another key issue that is already causing a schism among member states is the idea of linking EU funds to respect for the rule of law, and migration policies.

The notion has gained traction with increasing concern over the rule of law in Poland and Hungary, two countries which have also refused to take part in the EU's migrant relocation scheme.

Deeply divisive

The 27 leaders gather in Brussels without British prime minister Theresa May, in line with a series of meetings among the 27 to figure out the EU's future after Brexit.

But the issue of the EU budget is deeply divisive, "even without the UK around the table," as one EU official joked.

The traditionally arduous negotiations last time around lasted for 29 months.

The EU commission now wants member states to agree in one year, in time before the next European elections in May 2019. But EU diplomats have called the idea "very ambitious".

Some member states also argue that the new budget should be adopted by the freshly-elected European Parliament.