Germany warns no cheque will be forthcoming to bridge financial gaps

Berlin has said it is anxious to see a positive outcome to EU finance plan talks starting in Brussels today but warned not to expect a cheque from Germany to bridge any gaps.

"Everyone has to contribute to the success of talks. They will only succeed if everyone is aware of their responsibility to Europe," said a senior Berlin official.

"Germany will make its contribution to find a solution. However, it will not come in the form of a German cheque but in the form of a willingness to compromise from everyone." Regardless of how talks pan out today and tomorrow, German politicians are resigned to coming away from the negotiating table poorer, with Berlin paying more in and getting less out of the EU pot in future than under the current finance plan.

In a nod to London, however, the official said Berlin would still be looking for "fairness" among net contributors .

"Unlike other countries we haven't worked out what it will cost us in shillings and pence," the official said. "But we will make sure that the total package result sees net positions of well-off states are in a sensible relation to each other."

German chancellor Angela Merkel met French president François Hollande in Paris last night to discuss the budget talks. Observers said a joint Franco-German budget proposal was unlikely but that the two capitals were anxious to go into talks with a "similar basic orientation".

Merkel hovering

Ahead of talks, the German leader finds herself hovering between Paris and London. She is conscious of Mr Hollande's opposition to deeper cuts to the budget and is ready to be accommodating to ensure a deal that allows long-term planning for EU institutions and gives financial security for all net budget contributors.

During the last round of talks the German leader was a prominent backer of Mr Cameron's bid to reduce the original €973 billion proposal.

Yesterday, Berlin officials reacted allergically to the idea that meeting Britain's savings demands would see severe cuts to spending on promised measures to boost economic growth and competitiveness.

The only correct way to compare spending, Berlin officials say, is to compare a new budget agreement with the old finance plan - and not draft proposals circulating in Brussels.

"What is portrayed as cuts, cuts, cuts, are cuts compared to the [ last] proposal," said the official. "What is sold as cuts is often based on a comparison to a proposal from the commission that never had agreement of member states. The only relevant comparison is with the [ current] finance plan."

Viewed in this way, officials say, spending on so-called "future areas" to promote economic growth will be higher in the new financial plan than at present.

Another point of contention between Berlin and Brussels is how any EU finance deal always works out more expensive in retrospect than agreed on paper. This arises from the annual 2 per cent inflation buffer which added €110 billion to the final cost of the current finance plan and which Berlin will keep on the negotiating table today. "The payments we have to make every year to Brussels . . . increase on this inflationary basis year-for-year," said one official. "Irrespective of inflation, we have to find that money somewhere."