David Cameron says he is "not happy" as he arrives for crucial EU budget talks in Brussels, despite a compromise proposal which cuts the planned budget by around 80bn euros.

Herman van Rompuy and David Cameron (Reuters)

The British prime minister is understood to be unhappy with the compromise offered by European Council President Herman van Rompuy, because it would involve cuts to Britain's 3.6bn euro annual rebate. Speaking to the House of Commons on Wednesday, Mr Cameron said he would not accept any cuts to Britain's rebate.

Herman van Rompuy is caught in a balancing act between several wealthy EU nations, who want a freeze or a reduction to the annual EU budget, and a bloc of poorer nations who would like an increase.

Read Political Editor Gary Gibbon on the battle for an EU budget.

Mr Cameron, who is also facing Eurosceptic political pressure at home, has emerged as the leading figure fighting an EU budget increase.

Arriving at a preliminary meeting with Mr Van Rompuy on Thursday, Mr Cameron said: "These are very important negotiations, and clearly, at a time when we're making difficult decisions at home over public spending, it would be quite wrong - it is quite wrong - for there to be proposals for this increased extra spending in the EU.

"So we're going to be negotiating very hard for a good deal for Britain's taxpayers and for Europe's taxpayers, and to keep the British rebate."

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Rebate cut

Mr Van Rompuy's proposal is reported to cut the EU's proposed budget from a litte over £1tr euros to a little under 1tr.

I plead against someone like David Cameron in favour of an ambitious budget - Elio di Rupu, Belgian prime minister

However, it is also reported to involve Britain contributing to the UK rebate - money paid back to the UK because it does not benefit to a great extent from the large amount of EU money spent on agriculture.

Currently only some of the richer nations, and not including the UK, contribute to the rebate but Mr Van Rompuy has suggested that all EU members contribute. The Guardian reported that this could cut the UK's rebate by around 25 per cent.

The European Commission, the EU's executive arm, is backing more spending, saying that cross-border, Europe-wide initiatives will boost growth in less developed European economic regions.

Elio di Rupo (Reuters)

Two sides

Britain is supported by the Netherlands, Sweden and, to a certain extent Germany, in opposing an increase on EU spending. Standing against them are a number of countries including Belgium.

"It is regretful with the British," Belgian Prime Minister Elio di Rupo said. "Europe is above all a single market.

"For me, for Belgium it is more about solidarity, peace and prosperity for all Europeans. So I plead against someone like David Cameron in favour of an ambitious budget.

"We shall see if it is possible or not. I hope that other countries like France and Italy will support us to achieve the ambitious budget."

All 27 members of the European Union have a veto of the budget, meaning negotiations over the next few days are likely to be long and arduous. German Chancellor Angela Merkel told her parliament last week that talks may well have to restart next year.