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British Prime Minister David Cameron is pressing EU leaders in the margins of a European Summit in Brussels on Thursday (16 December) to support a declaration on limiting the size of the EU's future multi-annual budget (post 2013), diplomats have indicated. Although the budgetary issue is not formally on the summit's agenda, the UK leader is hoping to garner the support of enough member states in order to publish a letter later today or on Friday.

Mr Cameron is under pressure from elements of his own Conservative Party to limit future EU spending, especially as national governments implement thumping austerity packages back home. London recently lost its battle to freeze spending in next year's annual EU budget which is decided by majority voting among member states, unlike the long-term framework which needs unanimity.

A tie-up between the size of the future EU budget, Britain's EU budgetary rebate and funding for the common agricultural policy (CAP) is one deal rumoured to be under discussion between France and the UK. France is adamant that CAP funding should not be cut. Poland has been the leading opponent of attempts to limit the size of the multi-annual framework which is then subsequently broken down into annual spending plans. "What is the most important from our point of view is for the budget not to be reduced significantly, because we believe the funds flowing to Poland and other countries help us fight the crisis," Polish Prime Minister Donald Tusk told reporters hours before the summit.

At their last meeting before the summer break, EU foreign ministers on Monday (26 July) gave the greenlight for the start of negotiations on Iceland's membership bid. Talks will formally begin on Tuesday. The small north Atlantic island, with a population of just 320,000, has aligned itself with many EU laws and is seen as fitting snugly with the slightly more ineffable European 'norms', but negotiations on a few key issues - such as fishing rights and its traditional whale hunting - are expected to be difficult.

In addition, the UK and the Netherlands have linked actual membership with resolution of a dispute over the €3.8 billion in British and Dutch savings, lost in the banking crisis that consumed the nation in 2008. After the Icelandic Icesave internet bank collapsed two years ago, depositers in the UK and the Netherlands were compensated by their governments. The Hague and London now are demanding Reykjavik pay them back.

Icelanders themselves in a recent referendum rejected a payout plan that would have cost each household tens of thousands of euros. The disagreement has soured the population's sentiment towards the EU. Immediately after the crisis, a majority of Icelanders looked to the EU as a solution to their problems, but the bitter fight with London and the Hague has slashed support for EU membership on the island. In addition to potential controversial policy issues, there is also the increasingly negative opinion of Icelanders towards EU membership.

Britain and other European Union countries put their weight behind Franco-German calls for tougher eurozone rules at a summit today (29 October), agreeing on "limited" changes to the EU's main treaty in return for a cap on the EU budget.

Officials struggled to deliver the message that legal tricks could accommodate both Germany's push for treaty change and conflicting calls from several other countries which had rejected the idea. Regarding treaty change, the key word is "simplified", officials explained. A simplified provision, enshrined in Article 48, Section 6 of the Lisbon Treaty, allows member countries to unanimously adopt a decision amending all or part of the main elements of the Treaty on the Functioning of the EU (TFEU), which governs how the Union carries out its work. Such a procedure would avoid the need to call a constitutional convention, experts explained. In addition, the European Parliament would only be "consulted" instead of enjoying full voting rights as part of the normal co-decision procedure. The changes to the treaty are to be settled by mid-2013, before the expiry of the present emergency fund agreed earlier this year to deal with crises such as the one that hit Greece. The objective is to replace that with a permanent mechanism. The simplified treaty change procedure will not enter into force until it is approved by member states in accordance with their constitutions. Most EU countries are expected to ratify the decision by a simplified procedure in their parliaments. As for Ireland, it remains unclear whether a change effected in this way would require another referendum.

UK Prime Minister David Cameron appears to have been instrumental in forging a deal, lending his backing to Franco-German calls for treaty change in return for keeping a lid on the EU's 2011 budget. 11 member states, including Britain, France and Germany, will send a letter to the European Commission and Parliament today saying that their plans to increase the EU budget by 5.9% in 2011 are "especially unacceptable at a time when we are having to take difficult decisions at national level to control public expenditure". The letter was signed by the leaders of the UK, Germany, France, the Netherlands, Sweden, the Czech Republic, Denmark, Austria, Finland, Slovenia and Estonia. The bloc's finance ministers had earlier voted for a limited increase in the EU budget of 2.9%. "We are clear that we cannot accept any more than the 2.9% increase proposed by the finance ministers," the leaders say in the letter. Cameron argued that a planned increase in the EU budget would cost his country's taxpayers the equivalent of one billion euros. The 2.9% rise would still cost them £435m (500m euros). Parliament to fight back By agreeing to cap the budget, EU leaders set themselves on a collision course with the European parliament, which has the power to approve or reject the proposed budget. Negotiations between the European Parliament and the Council, which represents the 27 member countries, over the EU's 2011 budget kicked off on 27 October (see 'Background'). "If Cameron is prepared to give up the British rebate [...] then we can for sure discuss a reduction of the budget," said Martin Schulz, leader of the Socialist & Democrats group in the European Parliament, speaking to EUX.TV, the European policy news channel powered by EurActiv. "The European budget is not to be compared with national budgets," said Schulz. "There are no own resources. We have no European taxes. We have no own money. It is money coming from the member states. We can make no debts. The British budget must be reduced because there is enormous debt. Europe has no debts," he said.

Ireland's fiscal sovereignty was hanging by a thread late on Tuesday evening (16 November) as eurozone finance ministers announced that EU and IMF overseers were to head to Dublin to supervise preparations for a fresh round of cuts for the next four years to ensure that they are as deep as necessary. Print Comment article Dublin appeared to stand up to massive pressure from the European Central Bank and other countries that use the euro, particularly Spain and Portugal, to sign up to a bail-out, with Taoiseach Brian Cowen announcing to the Dail, the country's parliament, that the debt-addled country will not apply for assistance.

Earlier in the afternoon, the Wall Street Journal reported that finance ministers were in fact looking at a dual package of between €45 and €50 billion to bail out Irish banks and a broader sum of €80 to €100 billion to shore up the country's public finances, quoting unnamed sources. One contact close to the discussions told EUobserver they "could neither confirm nor deny" the report, while another said the numbers in the Wall Street Journal article "are not a figment of anyone's imagination." In such a situation, reported the WSJ, the IMF would chip in about half the aid that the EU and the UK together would provide. The non-eurozone UK is reportedly under pressure to contribute to any deal, given the heavy exposure of British banks in Ireland, particularly RBS, although Prime Minister David Cameron has recently voiced support for the idea of bilateral financial support for its one-time colony. Shares in UK financial institutions have slid over the past week as a result of the tumult.

European Commission President Jose Manuel Barroso was cheered in the European Parliament on Tuesday (23 November) when he outlined plans to publish an official proposal on EU self-funding before the end of June 2011. A fresh draft of next year's budget is also expected before 1 December.

Parliament has said debate on the controversial 'own resources' issue is a key demand in the ongoing battle over next year's annual EU budget, but France, Germany and European Council President Herman Van Rompuy have all indicated they oppose the idea of an EU tax. "We will use our right of initiative to put forward formal proposals as to own resources before the end of next June," Mr Barroso told MEPs in the Strasbourg plenary chamber. "The proposals ... will make large endeavours to achieving a consensus in the future. We're open to any ideas," he added.

"I am against the introduction of an EU tax," German Chancellor Angela Merkel said earlier this month. "I do not think that redesigning the way the EU get its revenue is a top priority," Mr Van Rompuy said a week later. Reacting to Mr Barroso's announcement, non-attached UK MEP Diane Dodds called on British Prime Minister David Cameron to clearly state that proposals for an EU tax would trigger a referendum in the country.