Reports that Germany will seek to cancel next month's European Council summit unless the UK lifts a threat to veto any rise in the European Union (EU) budget have been denied by Berlin.
Prime Minister David Cameron said on Friday that he would not sign up to an agreement on the long-term EU budget for 2014-20 if it amounted to a "bad deal" for Britain, sparking speculation that the negotiations may run into the sand.
The Financial Times reported that German chancellor Angela Merkel was planning to warn Downing Street that she will have the November summit called off unless he is ready to show flexibility.
But Mrs Merkel's spokesman Steffen Seibert told a news conference: "It is not true. I categorically deny this report.
"The German government has an interest in the success of this special summit in November and supports European Council president Herman van Rompuy in the goal to get an agreement on the long-term 2014-2020 budget."
Mrs Merkel is trying to persuade Mr Cameron to accept a German compromise which would cap EU spending at 1% of European GDP, rather than the 1.1% proposed by the European Commission. But the Prime Minister has made clear he does not see any case for a rise above inflation.
It was reported that the German chancellor would use a visit to Downing Street early next month to tell Mr Cameron that there was no point in holding a summit if he insists on a veto.
Mr Cameron's official spokesman said that the Government had received no communication from Berlin over any proposal to cancel the November 22 summit, at which it is hoped to reach agreement on the budget.
The PM's spokesman told reporters at a regular Westminster media briefing: "The Prime Minister has made it clear that he is willing to do a deal on the budget in November, so long as that is the right deal for British taxpayers.
"We have said that we don't see a case for increases in spending above the rate of inflation. This is a time when many countries are having to take some very difficult decisions and that should be reflected in the discussions we are having in the EU on the budget."