EU reaches initial deal on 2012 budget

Brussels - The European Union has reached a provisional agreement on a 2012 operational budget for its institutions, trying to keep expenditures in check as its 27 member states face austerity at home because of the financial crisis.

EU budget ministers and parliament representatives early Saturday reached a political agreement on an increase in payments of 1.85% - below the level of inflation - for a budget of €129bn.

The European parliament had sought higher commitments from its members, but the EU has been under pressure, especially from rich member states like Germany and Britain, to keep spending in check, much as national governments must.

EU Budget Commissioner Janusz Lewandowski said that "this is clearly an austerity budget as most member states are in the midst of a serious financial crisis."