EU agrees to limit Budget to $230b

The EU's 27 national governments and the European Parliament have agreed to limit expenditure to €129 billion ($230 billion) in the 2012 Budget, up 2 per cent over 2011, the Polish EU presidency says.

"The agreement was reached unanimously," said under-secretary of state for finance Jacek Dominik, who chaired a marathon meeting.

The limit was imposed by European governments that have been forced to cut their own Budgets and impose austerity because of the debt crisis.

The agreement came as a defeat for European Parliament members who had voted on October 26 for a free-spending Budget of €133.1 billion.

Ministers and diplomats at the weekend's talks sought to agree a Budget that walks the line between austerity and spending to boost growth.

"What sort of signal would Europe send to markets and 500 million Europeans if we don't manage to agree on our common Budget," the EU's Polish budget commissioner, Janusz Lewandowski, had warned.

Parliament's agreement is needed to pass EU Budgets. A year ago, a deadline for similar conciliation passed without a deal, leaving the EU briefly in Budget limbo.

Parliament wanted the EU to have more than €133 billion available to spend in 2012, a €6.6 billion increase on 2011, amounting to 5.2 per cent. The position of the EU states was to stick to a 2.02 per cent increase, meaning €129 billion.

Britain, the Netherlands, Austria, Finland, Denmark and Sweden said the Parliament wanted too much.

- AAP