We can work it out. Well we’re trying to anyway!! Smiling through gritted teeth, Prime Minister David Cameron and German Finance Minister Angela Merkel met last night to work out their differences over next year’s EU budget. Forgetting his highly embarrassing Commons vote against him last week -  the Labour Party and Tory backbench MPs joined forces to defy him, demanding a cut in the amount Britain puts into the European pot instead of Cameron’s proposal for a real-terms freeze – the PM had a slight change of heart:

"It would be wrong for the European budget to increase at a time when we are having to make difficult decisions, not just in Britain, but all over the European Union in terms of getting our budgets back towards balance, that's why I've said what I think at best should be a cut, at worst a freeze. But whatever the discussions we have tonight I will be trying to get a good deal for the British taxpayer, a good deal for Britain, one that I can put in front of my parliament and put in front of the British people," .

Meanwhile Angela Merkel says an increase in the budget to £80bn is necessary. According to The Centre for European Reform, Britain’s contribution would be £7.4bn a year if the budget were frozen, while the German or EU commission plans would result in an additional £400m-550m a year "at most". And yesterday in Brussels, in response to the UKIP Leader’s call for an ‘amicable divorce’ between the UK and Europe, she said couldn’t imagine a Europe without Britain. We’re the world's sixth largest economy and the EU relies on us for half its trade. So the talks were ‘warm’ and ‘friendly’, but there was no meeting of minds. It’s now a three-week countdown until EU leaders get to a summit to thrash the long-term spending plans.