BRUSSELS -- EU leaders gathering for a two-day summit in Brussels are warning of tough talks on a new seven-year budget for the 27-member bloc.
U.K. Prime Minister David Cameron said there would be no agreement at the summit without further spending cuts.
German Chancellor Angela Merkel said national positions were "still quite apart."
European Council President Herman Van Rompuy called for compromise.
"We need a budget for the future, with a clear focus on growth, innovation and creating jobs, especially for young people. We need a budget of moderation, taking into account difficult fiscal realities across Europe and providing value for money and we need a budget for pressing concerns, fighting unemployment, supporting the efforts of those worst affected by the crisis in Europe and playing our role in tackling global risks."
The start of the summit on February 7 was delayed for several hours to allow for further bilateral talks to seek compromise.
Britain, Germany, and other northern states insist on lower EU spending to reflect national spending cuts.
Southern and eastern states want funding to continue that supports poorer member states.
The 1.02 trillion-euro ($1.35 trillion) budget originally proposed by the European Commission has already been cut back to 943 billion euros ($1.25 billion).
With reporting by BBC, dpa, and AP