The European Union has failed to agree on a budget for 2011, missing a self-imposed deadline of midnight on Monday.

The deadlock centered on disagreements between the European Parliament and representatives of the 27 member states' national governments. The breakdown came despite an existing consensus on the actual budget numbers.

Last week, the European Parliament bowed to pressure from national governments by agreeing to increase next year's budget by only 2.9 percent, less than half of the increase that it had asked for. But member states balked at Parliament's call for more power in shaping of budget over the next decade.

European Parliament President Jerzy Buzek called the failure to agree on a new budget "bad news."

New projects threaten funding difficulties

Buzek indicated that "some member states" were to blame for the breakdown - particularly the United Kingdom, Sweden and the Netherlands. EU diplomats, however, said the Parliament had made demands that had nothing to do with the new budget.

The delay severely threatens planned institutions, including the European External Action Service (EAD), a new diplomatic service due to begin work at the start of next year, and the ITER experimental nuclear reactor in southern France

"This is an unfortunate failure," said the chairman of the budget committee, Alain Lamassoure. "But there are still a few weeks until the end of the year."

The lawmakers are due to continue their talks on the 2011 budget and the future financing of the EU at next month's summit, scheduled for December 16-17. If a deal still cannot be reached, the EU will be forced to operate using the 2010 budget on a monthly basis.

The EU's budget commissioner, Janusz Lewandowski, warned the warring sides not to gloss over the implications failing to reach consensus

"I don't want to be overdramatic ... but do not underestimate all the problems," Lewandowski said, adding that burden for subsidies due to be paid in January would fall to the member states.

Author: Sarah Harman (dpa, afp)
Editor: Chuck Penfold