EU leaders looked set to throw in the towel Friday as talks on a trillion-euro budget for the 27-member bloc faltered over tensions between rich and poor states and Britain's 'virulent' demands for austerity.
British Prime Minister David Cameron kept up his defiant stance as he
arrived for a second day of negotiations on the European Union budget for the seven years from 2014-2020.
"There really is a problem that there hasn't been progress in cutting back proposals for additional spending" Cameron said.
Britain, like many countries across Europe, is responding to economic crisis with major public spending cuts and Cameron argues that the EU must also make deep cuts.
His bleak assessment was shared by other EU leaders.
"I believe that also in this round, we won't be where have to get to, which is a unanimous decision," said German Chancellor Angela Merkel.
Cameron has been demanding cuts to the perks enjoyed by so-called "eurocrats" - the well-paid EU civil servants who are frequently targetted by the British press.
The latest blueprint spreads funds more generously to sensitive envelopes like the "cohesion" funds for regional development, and the farm subsidy programme cherished by France that is the budget's biggest single item.
"We will not accept the unacceptable," warned Prime Minister Mario Monti of Italy, which like France defends farm subsidies, but also backs cohesion funds.
Italy is among the countries that contribute more to the EU budget than they get back, known as 'net contributors'. The once mighty Spain is in the camp of those who get more cash than they put in.
Cohesion funds - billions of euros outlayed each year to the EU's poorer members so they can catch up with richer neighbours - are being defended tooth and nail by the 15 'Friends of Cohesion' nations, led by Poland and Portugal.