Portugal's prime minister has hit out at a proposal on how to finance the European Union in the coming years.

António Costa, speaking to Euronews in Brussels, has criticised the idea of reducing the EU's 2021-2027 budget.

European leaders are holding a summit today to begin the complex process of thrashing out the bloc's long-term financing.

Costa leads a group of countries who are against cuts to the EU's budget, especially in areas like agriculture and reducing regional disparities.

The latest budget proposal suggests cuts to the Cohesion and Common Agricultural Policy funds so that is more money for migration and defence.

"I think this proposal is bad in several ways," he told Euronews. "It is bad because it does not correspond to the global financing needs identified by the European Commission and the European Parliament.

"It seems to forget that the European Parliament is going to have the decisive word because it can approve or reject it. There is a position of the four largest political groups saying that Europe must have a budget that matches the ambitions it expressed in its strategic political agenda.

"We cannot continue to promise too much to Europeans and deliver too little. They (four political groups) were very clear in saying that the Cohesion Policy and the Common Agricultural Policy should not be reduced.

"It must not suffer because they are fundamental policies, not only in terms of the union's identity, because they bring the European Union closer to its citizens' day-to-day lives, but also because they are fundamental to two of the biggest challenges facing Europe: the transition to digital society and the climate transition. None of these transitions is possible without a good cohesion policy and a good agricultural policy."