How great are the differences?

EU leaders voice optimism that disagreements can be overcome in the coming weeks.

The budget negotiations broke up without a deal, but with a confident declaration that a deal is within reach.

The statement from the European Council gave an upbeat assessment that there was “a sufficient degree of potential convergence to make an agreement possible in the beginning of next year” and a forecast: “We should be able to bridge existing divergence of views.”

That begged questions about the size of the disagreements. What do the member states disagree about that prevented them from reaching a deal in November, but will not prevent them reaching a deal in early 2013.

François Hollande, the president of France, stressed the importance of a two-stage process. All previous budget negotiations, he claimed, had needed an “exploratory” summit and a “conclusive” summit. This was, he implied, simply a stage that had to be gone through. There had, he said, been a rapprochement.

An EU official said that the outlines of a deal had been “more or less stabilised”, though the proposal from Herman Van Rompuy, the president of the European Council, would have to be “slightly refined”.

According to David Cameron, the UK’s prime minister, a group of net contributors to the budget, including the UK, Germany, Sweden, the Netherlands and Denmark, objected to the second proposal put forward by Van Rompuy. Cameron wants an additional €50 billion trimmed from the overall budget compared to the European Commission’s proposal. Mark Rutte, the Dutch prime minister, demanded a cut of €100 bn.

The key figure for the net contributor countries is €1,000 bn. The Commission has proposed spending of €1,091 bn for the 2014-20 period, while the compromise proposal tabled by Van Rompuy would reduce spending to €1,010 bn. The net contributor countries would not accept more than €1,000 bn.

“Frankly, the deal on the table from the president of the European Council was just not good enough. It wasn’t good enough for Britain, and it wasn’t good enough for a number of other countries,” said Cameron after the summit.

Mario Monti, Italy’s prime minister, said Cameron had taken an “incoherent” position on budget cuts. He also said that the UK’s rebate should be abolished, something Cameron has rejected.

But Monti still said he expected an agreement within “weeks, not months”.

Robert Fico, Slovakia’s prime minister, said that although he had come to the summit in a pessimistic mood, believing that the debate would be confrontational, that was not the case. “We are very clearly set for an agreement; we just need a bit more time,” he said.

Angela Merkel, the chancellor of Germany, also declared herself confident of an agreement.

Hollande also played up the progress made. “We have taken a move forwards to go towards a final conclusion,” he said. But he also made clear that he could not live with the level of cuts being demanded by the UK and Germany.

“We must fund both cohesion and the Common Agricultural Policy,” he said, playing up France’s support for the cohesion countries.

“Germany doesn’t want to isolate the UK. France does not want to isolate the cohesion countries,” he said.

Whether or not the European Council can bridge its differences, might depend on whether or not France and Germany can come together again.

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