Merkel says EU budget talks will be tough, outcome unclear

German Chancellor Angela Merkel urged her EU partners on Saturday to work together to get a deal on the 27-member bloc's budget at a summit this week, warning that agreement was far from certain.

EU leaders meet in Brussels on Thursday and Friday to try to clinch a deal on its 1 trillion euro budget for 2014-2020 after they failed to do so in November.

In her weekly podcast, Merkel said she expected very difficult negotiations.

"Germany will try to contribute to a result. We will only be able to see at the end of next week whether it succeeds," she said.

"But it is worth trying," she said, adding that at a time when many European countries are struggling with economic growth, an EU budget deal would give certainty for financial planning.

She said the budget must be used to make sure the EU increases its competitiveness and that member states' economies become gradually more aligned.

In preparation for the summit, Merkel is holding a round of talks in the coming days. Spanish Prime Minister Mariano Rajoy comes to Berlin on Monday and she is to visit French President Francois Hollande on Wednesday evening.

Merkel had struck a more positive note earlier this week at a news conference with Italian Prime Minister Mario Monti, saying she was very optimistic about a deal.

Monti wants a reform of the EU system of rebates, arguing that Italy's contribution to the budget is out of proportion to its real wealth. Some net contributors, such as Britain, have demanded deep reductions in EU spending plans.

(Reporting by Madeline Chambers, editing by William Hardy)