Germany won't sign blank cheque to settle EU budget spat

A senior German government source warned on Wednesday that Germany would not simply open its chequebook to solve tricky EU budget talks and called for compromise ahead of a summit this week.

Speaking on condition of anonymity, the source said there was "never a guarantee of success" ahead of the EU summit on Thursday and Friday in Brussels where leaders aim to thrash out a deal on the bloc's seven-year budget.

"The federal government is aware of its responsibility to find a deal. The German payments will rise and the German net position will be worse, we know that," the source said.

"We know that European solidarity is necessary and Germany will make its contribution to find a solution. But the solution will not come in the form of a German cheque but in the form of a willingness to compromise from everyone."

He said he believed a solution was "reachable" and that the leaders had "difficult but decisive" talks ahead of them.

A special summit on the issue convened in November collapsed with leaders unable to agree on the latest proposal by EU President Herman Van Rompuy for a budget of 973 billion euros ($1.3 trillion).

And the leaders of the bloc's top two economies have already downplayed the chances for a deal.

French President Francois Hollande told reporters on Sunday that the conditions were "not yet in place" for a deal on the budget but has also signalled that Paris was prepared to make compromises to clinch an agreement.

German chancellor and European powerbroker Angela Merkel has already acknowledged that talks will be "very difficult."

The pair were due to meet later Wednesday and the source said more united the power couple than divided them.

"I am sure France and Germany will go into the talks with a common determination to find a solution," the source said.

At the failed summit in November, British Prime Minister David Cameron was cast as the principal villain with a demand for a cut in the budget to 886 billion euros.

The source in Berlin stressed the need to get London on board.

"It is important to get a deal with all 27" member states, he said, saying this was vital to enable business and countries to plan their spending.

Without citing concrete figures, the source said Berlin wanted to see "moderate" reductions in the spending on the common agricultural policy -- dear to France -- and in the level of spending on the European Commission.

In contrast, Berlin wants to see an increase in spending on items such as research and ERASMUS, a student exchange scheme, he said.