The leader of the biggest so-called frugal nations opposing a big increase in proposed spending warned on his arrival at summit talks in Brussels that the EU should "not move into further indebtedness," saying "We must not do that."

The European Commission proposed last July a two-trillion-euro ($2.3 trillion) seven-year spending plan for the 27-country bloc -- which the frugals immediately made clear was too high.

In the opposing camp, France, long a supporter of common debt, is pushing for ambitious spending as the bloc strives for independence in the technology and defence fields.

Leader-level talks on the budget begin in earnest Friday on the basis of a revised proposal presented last week, which most expect to be torn to pieces in a battle set to culminate in December.

The negotiating document cedes some ground to frugal nations with a suggested cut of two percent, which Merz warned would not be enough to satisfy Germany.

"The proposal currently on the table is clearly too high. The figures have to come down," Merz said.

The final budget must be approved by the EU parliament and member states.

EU chief Antonio Costa, who will spearhead the leaders' talks, has said the focus should be on the "key elements" to get a deal by the end of this year.

That includes "making progress" on new revenue sources, he wrote in a letter to leaders ahead of the summit talks.

The negotiating text does not so far include suggestions by lawmakers for an EU-wide tax on major technology companies and online gambling sites to help fund the budget, nor did it yield to France-led demands to roll over Covid-era debts.