A summit in Brussels ended without agreement on Friday on the European Union's next seven-year budget.
Hours of talks failed to bridge big gaps between richer northern countries and those which rely most on EU funding including those in the south and east.
The uneasy relationship between France and Germany also played a role, the BBC reports. Germany wanted further cuts in the budget proposal. France, supported by Italy and Spain, was keen to defend the EU's biggest spending projects.
However, European Council president Herman Van Rompuy said he was confident that a deal would be reached early next year.
Observers say another meeting will have to be called to sort out the difficulties, but it is unclear how the differences within the 27 nations will be resolved.
The European Commission, which drafts EU laws, originally wanted a budget of €1.025 trillion. Mr Van Rompuy later proposed a ceiling of €973 billion, but a number of countries did not accept this amount.
British Prime Minister David Cameron wanted the budget lowered to €886 billion, arguing that in times of economic crisis the EU must also make deep cuts.
Mr Cameron said Britain was not alone in seeking to reduce EU spending. An EU diplomat acknowledged that Sweden and The Netherlands also wanted cuts.
Failure to agree on a budget by the end of next year would mean rolling over the budget into 2014 on a month-by-month basis.
The last negotiations on a seven-year budget were in 2005, during which Britain deployed its veto during talks.