The german eu presidency has dangled the possibility of extra billions of euros in the blocs upcoming seven-year budget in a bid to break an impasse with the european parliament over proposals to link payments of eu money to rule-of-law principles.

Michael clauss, germanys ambassador to the eu, on wednesday wrote to meps handling the budget negotiations, warning that time was of the essence if the eus planned recovery fund and budget programmes were to start at the beginning of next year.

He suggested that an increase in the size of the budget to the tune of upper single-digit billions of euros would possibly be viable without giving specific figures. at the same time, however, he struck a hard line over the new rule of law mechanism that the two sides had been haggling over, warning that it should be narrowly drawn as a way of protecting the eu budget, rather than being conceived as a broad financial-sanctions mechanism.

Europe is waiting for an agreement between our institutions, he wrote. i am convinced that we both agree that the time has come to focus our minds, bridge remaining gaps, and reach a package deal now.

The letter from mr clauss marked an effort to break a near-six-week impasse with meps that officials and diplomats fear threatens the timely introduction of the eus upcoming 750bn recovery plan, which is set to be unveiled alongside the seven-year multiannual financial framework.

Proposals agreed at the july eu summit to curb funding to countries deemed to be in breach of eu laws and values have triggered a split both between member states and with the european parliament. northern european countries and meps want the plan pitched by the german eu rotating presidency made tougher, while central european states such as hungary say it is already too strict.

At the same time, the european parliament has been pushing for increases in the budget envelope, arguing that the deal agreed by leaders in july entails damaging cuts to some key areas of spending compared with draft proposals from the european commission. the parliament also wants a binding promise that the eu will create new forms of revenue known as own resources to help it repay the borrowing under its recovery proposals.

In the letter, seen by the financial times, mr clauss did not specify the increase in spending that might be possible, but his wording pointed to a potential boost of nearly 10bn at the midway point of the next seven-year spending package, which is worth 1.8tn in total.

However, the offer was met with immediate scepticism by meps as inadequate. johan van overtveldt, the belgian mep leading the negotiations for the parliament, told the ft that the letter was full of good intentions. but he added that the parliament would not accept top-ups to eu spending programmes if it meant diverting money from other parts of the budget.

We want an agreementon the recovery fund, but not at any price, said mr van overtveldt.

The stand-off over the rule-of-law mechanism is proving to be the most bitterly divisive aspect of the budget discussions as the parliaments main parties have demanded a tool that can suspend funds for countries who breach eu values.

Mr clauss, however, repeated that the mechanism would only kick in if breaches of the eus rule-of-law regime directly affected the sound management of the eu budget. the position stands firm against meps who want sanctions to kick in over contentious judicial reforms orclampdowns on free speech that have taken place in hungary and poland.

The letter said article 7 of the eus treaty already provided a route to tackle such cases of general disrespect for the rule of law.

The gambit from the german presidency is also likely to encounter resistance from richer frugal governments who have said they will not pay more into the budget and who have also rejected the presidencys rule-of-law proposal.

One frugal diplomat said the letter proved once against that the eus values are for sale.