European leaders meeting to decide a new multi-year budget for the 27-country bloc failed to make progress in Thursday’s talks, Dutch prime minister Mark Rutte has told reporters.

Leaving the meeting just after midnight, Rutte said that while he is not hopeful about a solution, ‘miracles do happen’.

During Thursday’s tentative talks, German chancellor Angela Merkel insisted that Germany, the Netherlands and other wealthy countries retain the the rebates they get that help to offset their large budget contributions, rebates which European Council president Charles Michel wants to phase out.

In addition, the Netherlands, one of the ‘frugal four’ EU countries, who commentators say have tacit German support, is determined that the EU budget should stick to the current limit of 1% of GDP.

The #FrugalFour (🇳🇱🇦🇹🇸🇪🇩🇰) convened prior to #EUCO. Together, we are advocating for a new MFF based on a 1% contribution with reductions remaining in place. In addition, we want the budget to be modernized, with more focus on e.g. rule of law, migration, innovation and climate. pic.twitter.com/ablzVeTODJ

— Mark Rutte (@MinPres) February 20, 2020

‘We are deeply divided on this,’ Rutte said. ‘The Christian Democrats are so divided that they have had a separate meeting with just Christian Democrat leaders.’

The European Commission wants spending to rise to 1.11% of GDP and the European parliament 1.3% for the period 2021-2027. Michel is due to come up with new proposals on Friday morning after holding a string of bilateral talks with leaders.

The #FrugalFour (🇳🇱🇦🇹🇸🇪🇩🇰) convened prior to #EUCO. Together, we are advocating for a new MFF based on a 1% contribution with reductions remaining in place. In addition, we want the budget to be modernized, with more focus on e.g. rule of law, migration, innovation and climate. pic.twitter.com/ablzVeTODJ

— Mark Rutte (@MinPres) February 20, 2020