Budget Wrangling at EU Summit

European Commission chief Jose Barroso warned EU leaders, gathering for a summit in Brussels on Thursday, against short-changing the bloc in negotiations over its long-term financing.

Addressing calls by the European Union's richest countries to freeze spending over the 2007-2013 budget round, Barroso said a sharp hike was needed for the EU to "project a stronger voice worldwide".

"We cannot have more Europe with less money," he told a pre-summit news conference, urging the leaders to agree to the so-called financial perspectives by next June. "Without a deal on time, the fulfilment of the political priorities that the 25 member states have agreed to will be delayed. Europe cannot afford that to happen," he added.

Debate to reach critical mass in January

The six biggest contributors to the EU budget -- Austria, Britain, France, Germany, the Netherlands and Sweden -- have called for the 2007-2013 budget to absorb no more than 1.0 percent of the EU's gross national income (GNI).

But Barroso's EU executive wants the level raised to 1.14 percent of GNI to take into account ambitious infrastructure projects and subsidies for the bloc's newest and relatively poorer members.

The financial perspectives debate is expected to come to a head under after Luxembourg takes over the union's rotating presidency in January. If there is no deal by June, many fear that the next presidency under Britain will be unable to agree on the spending round in time, given London's fierce defence of its own financial interests in the EU.

Stability Pact reforms expected

Probably in March, the Luxembourg presidency is also expected to unveil reforms to the EU's Stability and Growth Pact, the budget rules underpinning the euro.

Barroso noted that Italian Prime Minister Silvio Berlusconi was likely to raise his own demands for the pact's reform at the Brussels summit, which go further than fiscal hardliners in Brussels are prepared to accept. "I assure you the commission will take a very firm role in that debate," he said.

"For me and the commission, it is important that this pact is credible and that the rules are applied in full respect of the treaty for all member states, regardless of their dimension or their economic development," he said.

The European Parliament in Strasbourg meanwhile approved a 2005 budget for the EU that foresees expenditure of €106.3 billion ($142.7 billion), a compromise between the demands of the commission and member states.