EU’s first post-Brexit budget: Angela Merkel warns of ‘tough and difficult negotiations’ after EU left with £62bn budget shortfall The 27 EU leaders are squabbling over the 2021-27 budget that pays for farming aid and regional development

European Union leaders will continue talks on Friday on their first post-Brexit budget in Brussels, after a long night of wrangling over how to carve up their €1 trillion, seven-year funding plan.

The German Chancellor Angela Merkel warned of “very tough and difficult negotiations” on the budget, but stressed that the EU needed a swift agreement to ensure that funding programmes were operational by the beginning of next year.

“However, I do not yet know whether this will be successful,” she said. “Because we feel that our concerns have not yet been sufficiently taken into account in many places.”

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The 27 EU leaders are squabbling over the 2021-27 budget that pays for farming aid and regional development as well as newer concerns such as environmental action and security.

UK hole in budget

This year’s battle is particularly tricky as it is the first since Britain left the EU. The UK was one of the biggest contributors to the collective pot, and its departure leaves a financial shortfall of around €75bn (£62bn).

Richer members want the hole to be covered by budget cuts, the poorer ones want the others to pay more.

The French President Emmanuel Macron said he wanted the budget to remain ambitious, but would not indicate if France was ready to pay more.

“It would be unacceptable to have a Europe that compensates for the departure of the British by reducing its own means,” he said.

“It will take the time needed to reach an ambitious agreement. This could take several hours, several nights, several days.”

The European Council President Charles Michel, chairing the summit, is proposing an overall budget of €1.09trn, that adds up to 1.074 per cent of the EU’s gross national income.

However, the bloc’s net budget contributors – including Germany, the Netherlands, Austria, Denmark and Sweden – say that is too high: the so-called “frugal” faction of richer, northern EU members is calling for the budget to be capped at 1 per cent of EU gross national income.

Hungary and Poland could fall foul of the “rule of law procedure” that freezes funds for governments that breach the EU’s fundamental values, such as maintaining an independent judiciary.