EU Parliament head warns 'no deal' at summit

BRUSSELS (AFP) - The head of the European Parliament warned today of a possible "no deal" at a February summit intended to fix a seven-year budget of around a trillion euros (S$1.7 trillion).

German Socialist Martin Schulz said at a press conference that the positions among the 27 EU member states remain "very far apart" ahead of the Feb 7-8 talks.

He said that if this new bid to get agreement on the 2014-2020 budget fails, the European Union could live with annual budgets.

Under this fallback system, which critics say undermines longterm projects and planning, the year's budget is automatically renewed accounting for inflation for a further 12 months.

The Parliament can block a deal among leaders if one is brokered, and Schulz said that the greater the cuts leaders want to apply, the more likely this would be.

"If there is no deal, we can live with an annual budget," he said, again criticising proposed cuts suggested by EU president Herman Van Rompuy in a bid to get agreement between the EU's biggest funders, such as Germany, France and Britain, and newer states who benefit most from redistribution, like Poland.

Van Rompuy wants to see a 75-billion-euro cut to bring the 2014-2020 EU budget down to 973 billion.