EU leaders have reached agreement on the 7-year budget for 2014-2020 after marathon talks in Brussels.
The deal was announced by European Council President Herman Van Rompuy, who said it was “worth waiting for”.
The new budget amounts to 908 billion euros ($1.2 trillion) in forecast payments. It is the first-ever reduction in the EU’s multi-annual budget.
UK PM David Cameron – who had been pressing for cuts – hailed it as a “good deal for Britain”.
“I think the British public can be proud that we have cut the seven-year credit card limit for the EU for the first time ever,” David Cameron said.
French President Francois Hollande – who had argued against big spending cuts – said it was a “good compromise”.
The agreement came after almost 24 hours of negotiations, as countries such as France and Italy sought to protect spending.
The budget amounts to about 1% of the EU’s overall GDP – it is dwarfed by the combined national budgets.
It must still be approved by the European Parliament, and MEPs had previously said they were prepared to block anything that amounted to an “austerity” budget.
Herman Van Rompuy said the deal amounted to a cut of roughly 34 billion euro in both commitments and payments.
He said EU leaders had met their responsibilities by overcoming sharp differences, and he hoped the European Parliament would meet its responsibilities by passing the budget.