Reuters reports that European Council President Charles Michel is due to propose a smaller 2021-27 EU budget than previously envisaged, officials said on Friday, in a bid to make the bloc's mass economic stimulus more palatable to thrifty northern member states.

With the EU economy headed for its worst recession, the bloc is haggling over how to finance recovery from the coronavirus pandemic with the frugal, wealthy north facing off against the high-debt southern countries hit harder by COVID-19.

Under discussion is the bloc's next budget, so far envisaged at 1.1 trillion euros, and an attached 750-billion-euros recovery fund. The frugals want a smaller budget and economic reforms as a condition for accessing the extra funds.

The 27 national EU leaders are due to meet in Brussels next week for their first face-to-face talks since coronavirus drove Europe into lockdown in March to bargain over the proposal.

Their chairman Michel is due at 0900 GMT on Friday to lay out his compromise plan and two officials familiar with the proposal said he would lower the size of the budget to try bring the frugals onboard.