Il Nuovo Postiglione - EU leaders clash over budget as spectre of French elections looms

The 27-nation European Union wants an agreement by Christmas, worried that any future dealmaking will be derailed by potential eurosceptic wins across the bloc, including in France where the far right's Marine Le Pen is favoured in opinion polls.

"We are facing very, very difficult negotiations," Germany's Chancellor Friedrich Merz told reporters as he arrived at the summit talks.

Leaders are "still very far apart", he added, suggesting they "pack a few extra shirts" for a final summit meeting set for December.

The fear is that without a year-end deal, the already fraught talks could get much harder.

Le Pen wants to slash the country's contribution to the EU budget to help cost savings in the bloc's second-biggest economy.

Putting the screws on the EU, Le Pen travelled to Brussels on the eve of the summit to warn of a "democratic scandal" if leaders adopted a budget before French voters head to the polls in April and May.

The nearly two-trillion-euro budget will determine the EU's main priorities for the period from 2028 to 2034, from agriculture and defence to competitiveness and migration.

Leaders must agree on how much to give to farmers, what to spend on defence, how to make the economy more competitive against the United States and China, and whether to pour European money into migrant "return hubs" in Africa.

EU leaders appeared to be losing faith in an agreement by December, as the latest draft conclusions dated Wednesday call for only a "timely agreement" rather than setting a deadline "by the end of the year", as in an earlier version.

- Spectre of Le Pen -

Ireland, which holds the rotating EU presidency, presented the latest proposal that will form the basis of the talks, with cuts of around 140 billion euros to the budget total.

But sealing a deal is a steep challenge, with three opposing camps all unhappy at what is on the table -- each for their own reasons.

On one side is Germany, leading a group known as the frugals that includes the Netherlands and Sweden, which demand cuts of several hundred billion euros.

"This is not even a starting point for these discussions. This is far too big, far too expensive," Swedish Prime Minister Ulf Kristersson said of the draft.

In another corner is France, which opposes massive cuts to the budget and believes the continent needs a larger pot to match the rising challenges it faces.

French President Emmanuel Macron did not address reporters upon arrival in Brussels, but Paris has made clear it is not happy.

A French official warned there could be no agreement without "substantial" new bloc-wide taxes including on large companies, environmental taxation and levies on tobacco.

Paris also wants EU-wide taxes on digital services, crypto-assets and online gambling, which the European Parliament also seeks.

And in the third camp are the "Friends of Cohesion", demanding more funding specifically to support agriculture and regional development.

"The proposal is clearly insufficient," said Spain's Pedro Sanchez, maintaining that the money on the table was "far short" of what was needed for the bloc to respond to the many challenges it faces.

European Council President Antonio Costa will lead negotiations in the countdown to December, with an extraordinary meeting added in late November to help get the budget over the line.

The sense of urgency is real, with elections looming in Italy, Poland, Greece and Finland as well as France.

Even if Le Pen is just a candidate at this stage, a European diplomat said "she'll be in the room tomorrow" with the leaders, as her potential victory hangs over their talks.

No agreement before France votes in April and May would mean the negotiations restart in the summer, which a second EU diplomat said would be "an awful exercise".

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H.Zampino--INP