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After agreeing on the terms of a new Brexit deal, EU leaders have turned their focus to other pressing issues, including climate change and the bloc's next budget. The talks are expected to be highly divisive.
Incoming European Commission President Ursula von der Leyen is laying out her plans for the future of the EU on the second day of a leaders summit in Brussels.
The German politician has said she wants to focus on priorities such as greater action on climate change, digitaization, innovation and boosting the EU's global role during her five-year term.
"There's still a lot of work ahead of us," von der Leyen said ahead of the summit.
Read more: What's new in this Brexit deal?
EU leaders also wrangled over a new budget for 2021-27 and the question of how to fill the funding shortfall created by Brexit. The departure of the UK — one of the top contributors to EU coffers — means the bloc will have €12-14-billion ($13.3-15.5 billion) less per year to tackle new challenges such as migration and climate change.
That gap, combined with deep divisions between member states, will make this year's negotiations particularly tough. Angela Merkel said on Friday that an agreement had not yet been reached.
"We are still a long way from an agreement," she said, adding, "we are under time pressure."
Why is the budget so divisive?
Big net contributors such as Germany, the EU's largest economy, oppose the commission's call to increase the budget above the current 1% of the bloc's gross national income. Others, including southern and eastern states, want to see a bigger budget and have criticized expected cuts to agricultural subsidies and funding for poorer EU regions.
German Chancellor Angela Merkel on Thursday said Berlin would be "disproportionately burdened" by an increase in the bloc's budget and urged the EU to consider a discount for Germany.
"That's why we need to have a discussion about a fair distribution of burdens on the funding side and also about a discount for Germany," she said.
What's the likely outcome?
The European Commission, the EU's executive branch, has called on member states to come to an agreement on the long-term budget by the end of the year. Failure to meet that deadline would delay the release of funding programs, likely impacting groups such as Erasmus exchange students, farmers and researchers.
Also on Friday, EU leaders formally approved former International Monetary Fund chief Christine Lagarde as the new president of the European Central Bank. She is set to take office on November 1.
A climate-neutral Europe?
Another key item on Friday's agenda: boosting EU efforts to curb climate change.
Leaders are set to discuss contentious plans to set a 2050 target for the bloc to achieve net climate neutrality. That goal, which would involve slashing and offsetting greenhouse gas emissions, was blocked by four member states at the last summit in June.
The issue is due to be revisited in December ahead of the climate change conference in Santiago, Chile.
nm/rt (Reuters, dpa)