European leaders on Friday morning are studying proposals to fix the EU’s budget at €960bn which would also involve a large cut in the Netherlands’ €1bn rebate.

The draft proposals envisage the Dutch discount being reduced to €650m. EU leaders resumed their talks at 06.30 on Friday morning.

The Netherlands, Britain and Germany have been at the forefront of efforts to ensure total EU spending is reduced. The new figure is €12bn below the total which was thrown out at November’s summit.

Difficulties

Dutch commentators say if the Dutch rebate is cut, prime minister Mark Rutte will be in a difficult position and will face tough questioning from MPs. Rutte went to the summit saying he was determined the EU budget would be cut and the Dutch rebate would remain intact.

The Netherlands is one of the biggest net payers into the EU’s coffers. The payment is based on national income, plus a share of value-added and import tax receipts.

Officials negotiated its €1bn discount in 2005 and it is due to expire in 2014.

Dutch diplomats told the Financieele Dagblad the €650m figure is not set in stone and could be amended. In addition, the Dutch European value-added tax bill could also be cut, the diplomats said.

The negotiations are likely to continue for hours to come, commentators said. Even if EU leaders reach a deal on the budget, it still has to be approved by the European parliament.