European leaders have failed to reach a deal on the next EU budget after two days of marathon talks.
But EU Council President Herman Van Rompuy believes an agreement can be struck early in 2013.
“The bilateral talks yesterday and the constructive discussion within the European Council show a sufficient degree of potential convergence to make an agreement possible in the beginning of next year,” he told reporters after the summit.
British Prime Minister David Cameron leaves Brussels having built an alliance with northern European states, such as Sweden and the Netherlands, which are equally insistent on cuts.
He had been cast as the villain ready to wield the veto if he did not achieve at least a real-terms freeze in EU spending.
“We are not going to be tough on budgets at home, just to come here and sign up to big increases in European spending,” Cameron told journalists.
“From a budget of nearly a trillion euros, it is simply not acceptable to carry on tinkering around the edges…we need to cut unaffordable spending.”
German Chancellor Angela Merkel said she was sympathetic towards Cameron’s position, but said that she was no more so than those taken by all the other EU countries.
The next budget negotiations between EU heads and government are expected to take place in January, according to Belgian Deputy Prime Minister Didier Reynders.