Brussels, 12/11/2004 (Agence Europe) - As expected, the two wings of the Budget Authority (namely the Council of Ministers and the European Parliament) failed to reach agreement in Brussels on Thursday on the controversial areas of the 2005 budget, viz. Funding for EU agencies (the EP is refusing to finance them and is refusing to give way); how to locate the necessary funding for Iraq, Northern Cyprus, Croatia and the Northern Ireland Peace Programme; and the scale of increase of payment credits (see Europe of 10 November, p.13, for details). As expected, the Council's Budget Committee (which prepares dossiers for the EU budget ministers) decided to reconsider the detail of the Council's first reading (see Europe of 17 July, p.6), which means that the meeting between the two wings of the Budget Authority scheduled for 25 November ahead of the Council's second reading of the draft Budget 2005 is likely to be tough. In order to reach overall agreement on the draft Budget 2005 so it can be adopted by the EP in December, the two institutions will have to compromise over mobilisation of the flexibility instrument (budget mechanism authorising breaking through upper annual limit of one of the financial perspectives headings by up to EUR 200 million).