German Chancellor Angela Merkel has said that she doubts European leaders taking part in a summit this week on the EU's 2014-2020 budget would reach an agreement.
Merkel's statements on Friday came as EU diplomats said that UK Prime Minister David Cameron's "virulent" demands for austerity measures were blocking a deal on the budget.
A day after talks on the nearly one trillion euro spending framework saw a rocky start with serious disagreements among officials in Brussels, Merkel said that another summit on the budget of the 27-country bloc would most likely be required at a later date, probably early next year.
"I believe that the positions are partly still very far apart ... I think that tomorrow we will advance a little, but doubt that we will achieve a result. I have already said that I think there will be a second stage," Merkel told journalists after the conclusion of the first day of summit.
In a battle pitting several wealthy member states against those seeking a bigger aid budget, Cameron is seeking to reduce the financial influence - and political sway - of the EU's institutions.
As he arrived for a preliminary meeting with Herman Van Rompuy, president of the European Council of the 27 heads of state and government, Cameron said he was not happy with the latest budget proposals.
"These are very important negotiations," Cameron said. "And clearly, at a time when we're making difficult decisions at home over public spending, it would be quite wrong - it is quite wrong - for there to be proposals for this increased extra spending in the EU. So we're going to be negotiating very hard for a good deal for Britain's taxpayers and for Europe's taxpayers, and to keep the British rebate."
Facing an increasingly vocal Euroskeptic electorate at home, Cameron is under huge pressure to veto any seven-year deal at the summit opening on Thursday which would exceed the old 2007-2013 $1.28 trillion budget by as much as a euro.
Those opposing cuts to the budget say that European institutions need the means to implement their policies, which include creating jobs and economic growth, helping development in many southern and eastern nations, and closing the wealth gap between member states.
"Certain countries want to make drastic reductions in the budget. That's a big mistake," said Elio Di Rupo, Belgium's prime minister.
The budget primarily funds programmes to spur growth in the bloc less developed regions and farming, and amounts to about 1 per cent of the EU's gross domestic product.
Manos Tzafalias, a Greek journalist, told Al Jazeera it was unlikely that a firm deal would emerge from the summit.
"It's very rare that we have clear-cut deals within limited timeframes," he said.
If the negotiations stall, he said, the union could potentially be stuck in a situation where it had little ability to plan for the mid- or longterm future.
"If by 2014, when the budget is supposed to kick in, they will just keep the old one and renew it every month," he said.
The European Commission, the EU's executive arm, backs more spending, arguing that cross-border initiatives will help to create the economic growth and jobs that the bloc of a half-billion people needs.
Cameron is set to do the talking for some of the other member states - such as the Netherlands, Sweden and, to a certain extent Germany - who also want limits on EU spending when he opens a session of bilateral talks with EU President Herman Van Rompuy.
He will demand a real cut in the EU budget, claiming that is the only justifiable outcome at a time when almost every member state has to cut its budget to lower debt.
"It would not be acceptable to see some huge increase in EU spending when other budgets are being cut," Cameron said in the run-up to the summit.
Poland and Spain, on the other side, will head a group of nations asking for more funds to be committed to help economic development in many southern and eastern nations and close the wealth gap in the EU and boost jobs and growth.
Going into the open-ended summit which might well stretch into Saturday, Van Rompuy made a first compromise proposal that leaned towards Cameron's demands. It proposes a cut of between $4bn and $31bn, depending on how the figures are read.
"With less money, we cannot do the same as before," Van Rompuy wrote in the invitation letter he sent to the 27 leaders.
Since each of the 27 member states has veto power over the budget, the outcome is a cliffhanger.
Leaders from Denmark up north to Spain and Italy down south are already threatening vetoes, sometimes for opposing reasons.
If the summit fails to find a compromise, the issue could spill over into a new meeting next month, or into next year.
There is no set deadline for a deal but the closer it gets to 2014, the tougher it will be for a smooth introduction of new programmes.
If there is no deal up to 2014, there will be a rollover of the 2013 budget plus a 2 percent increase accounting for inflation.