Britain's Cameron stands firm in EU budget battle

Cameron arrived in Brussels on Thursday afternoon in bullish mood, insisting he would not back down in pursuing a reduced seven-year budget for the European Union, demands which caused the last summit in November to collapse.

"When we were last here in November, the numbers that were put forward were much too high. They need to come down. And if they don't come down, there won't be a deal," Cameron told reporters as he arrived.

Last year, Cameron refused to accept the near trillion-euro budget on the table in Brussels, despite EU President Herman Van Rompuy cutting it back to 973 billion euros ($1.32 trillion) under pressure from London and backers.

The prime minister said his position had not changed this time around, insisting the EU could not be "immune" from the austerity measures being implemented across the continent.

Cameron, who is struggling to shake off recession at home, is pushing to cut "tens of billions (of euros) off where we were in November", a British government source said before the summit talks began.

He has sought the support of allies who also pay more into the EU than they get back, including Germany, and had another meeting before the summit with the leaders of northern European nations Denmark, Sweden and the Netherlands.

As the talks veered into Friday morning, reductions to the budget looked likely -- although the extent and scope of cuts still needed to be finalised.

But Cameron's demands have again put him on a collision course with his European partners, particularly France, which has warned against cutting spending on investment at a time when 26 million people are unemployed across the EU.

The prime minister had been due to meet French President Francois Hollande for pre-summit talks, along with German Chancellor Angela Merkel, Van Rompuy and European Commission President Jose Manuel Barroso.

However, Hollande did not attend.

The French leader had earlier told reporters that "if Europe, seeking to reach a compromise at any cost, should abandon its common policies, forget farming and ignore growth, I will not agree".

Cameron's promise last month to hold a referendum on Britain's membership of the EU by 2017, in which voters will have the option to vote for their country to leave the bloc altogether, was a nagging issue for some.

Martin Schulz, the head of the European Parliament, warned against giving into London's demands, particularly as the budget "would cover a time span during which at least one member state has said that it may leave the European Union".

That sentiment was echoed around the leaders' negotiating table, including by Italian Prime Minister Mario Monti, according to a European negotiator.

Cameron's referendum pledge won him plaudits at home, especially with elements of his Conservative party who have long called for powers to be repatriated from Brussels to London.

But many EU leaders are growing impatient with what they view as Britain's continued demands for special treatment, now backed up with a concrete threat of exit.

Memories are also still fresh of a summit in December 2011 when Cameron found himself isolated after vetoing a fiscal pact aimed at tackling the crisis in the eurozone, of which Britain is not a part.