“EU leaders have begun budget negotiations hours later than planned, amid deep divisions over spending priorities for the next seven years.
The Brussels summit chair, Herman Van Rompuy, urged them to compromise and keep the EU budget focused on growth, innovation and creating jobs.
The two-day summit aims to reach a deal that eluded the leaders last November.
British Prime Minister David Cameron says he will not accept a deal unless further cuts are made to the draft.
He said the figures being proposed for 2014-2020 “need to come down – and if they don’t… there won’t be a deal”.
Any one of the 27 member states can veto a budget deal – a fact which makes the negotiations all the more difficult.
Earlier on Thursday leaders explored possible compromises in small groups.