First budget cut in European Union history reached

“Deal done,” Herman Van Rompuy, who chaired the meeting of the 27 EU leaders, said in a message sent on Twitter.

The agreement, which fixes EU spending over the seven-year period from 2014-2020, set a ceiling of 960 billion euros for appropriations. It will now go to the European Parliament for final approval, a process that could take several months.

The deal meets the demands of northern European countries such as Britain and the Netherlands that wanted belt-tightening, while maintaining spending on farm subsidies and infrastructure to satisfy the likes of France and Poland.

It is the first net reduction to the EU's long-term budget in the bloc's history, representing a decrease of around 3 percent on the last budget and shaving spending in areas from infrastructure to scientific research.

Last-minute haggling over precisely how to divide up the 960 billion euros (US$1.3 trillion) to be spent between 2014 and 2020 delayed the agreement.

“The 960-billion-euro figure is aimed at finding a balance,” said a French official in Brussels who declined to be named.

As well as being signed off by all EU leaders, the deal must still be approved by the European Parliament, where leading legislators have already expressed opposition.

After negotiating through the night, leaders broke up for a rest, and returned to a myriad of questions, including whether to reduce the burden on the Netherlands.

Northern European states were adamant that as they shrink spending at home and grapple with the aftermath of the global financial crisis, the European Union had to do the same.

Around 12 billion euros was cut from the last budget proposal, made at a summit in November.

While vast, in annual terms the budget amounts to just 1 percent of total EU economic output.

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