European leaders will push for a free-trade agreement with the US as talks kick off at the Brussels summit Friday, according to a draft joint statement.

Germany and Britain have rallied up support from the rest of the European Union (EU) to reach a pact with the US to help restore the 27 nation bloc's economy.

"All efforts should be devoted to pursuing agreements with key partners," EU leaders will say, according to the statement obtained by Reuters.

Leaders are hoping US President Barack Obama will support the initiative next Tuesday in his annual State of the Union speech.

EU Trade Commissioner Karel De Gucht and US Trade Representative Ron Kirk are said to have drawn up a draft proposal. De Gucht indicated there was enough common ground to begin negotiations.

While talks could begin within months, negotiations may take a while longer.

However, both sides seem to want to come to an agreement as soon as possible and by the end of 2014.

US officials have said they need a strong political commitment from the EU that it is serious about opening up trading before negotiations go ahead.

German Chancellor Angela Merkel, with support from Britain, has been keen on a deal for some months.

"I wish for nothing more than a free-trade agreement with the United States," Merkel said last month in Berlin.

Meanwhile, the EU is moving closer towards a compromise deal on the 2014-2020 budget after all-night talks.

They are poised to cut the budget for the first time in its 56 year history, slashing the EU's spending by £30m, according to a proposal tabled early Friday morning.

It includes a £1.7bn reduction in the size of the EU's administrative budget.

However, the deal could be choked by Members of European Parliament after Speaker, Martin Schulz, threatened to use new powers under the Lisbon Treaty to bar any cuts in the size of the EU budget.

RD

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