Member states of the informal group known as Friends of Cohesion met in Brussels on Friday as a plenary meeting of EU leaders, unable to reach a compromise on the next seven-year EU budget, was postponed until further notice.
The extraordinary summit on the Multiannual Financial Framework started on Thursday afternoon and, following the first plenary session, continued into the night with bilateral meetings between European Council President Charles Michel and all the leaders. A new plenary meeting was initially announced for 10 am on Friday, then for 11 am and for noon, and has now been postponed until further notice.
Michel obviously failed to reconcile the opposite views for now and had nothing new to propose, so there was no point in the leaders meeting again at a plenary.
Meanwhile, the leaders of the countries known as Friends of Cohesion met to try to agree on a common approach. Before them, the group nicknamed the Frugal Four did the same.
The Frugal Four countries Austria, Denmark, the Netherlands and Sweden insist that the 2021-2027 budget should be limited to one percent of Gross National Income, which means that the budget would be €75 billion smaller than the present one. The €75 billion is basically Britain's contribution to the EU budget. The four countries argue that the smaller Union means a smaller budget.
The four countries and Germany, which is somewhat more flexible, are entitled to a rebate, a sort of discount on payments into the EU budget to ensure that no member state has excessive allocations in relation to its wealth. The rebate was introduced in 1984 when Britain was allowed to reduce its contribution to the EU budget.
In its proposal for the next Multiannual Finance Framework, the European Commission thought that Britain's departure from the EU was an ideal opportunity to do away with the rebate altogether. This met with strong resistance from these countries, which led Michel to propose a gradual reduction of the rebate.