European leaders sat down to drink £130 bottles of wine just hours before crucial budget talks collapsed, with the British blaming EU President Herman Van Rompuy for the embarrassing failure.

On the menu at the lunchtime meeting was 1992 Chateau Angelus Grand Cru, in a show of opulence that dismayed Britain's delegation in Brussels.

It only added to the feeling summed up by David Cameron, when he accused the EU of living in a parallel universe following the dramatic collapse of more than 40 hours of meetings.

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The Prime Minister issued a public call for EU institutions to get into the "real world" as he said he could not cut billions of spending at home only to agree to increase the European budget.

Mr Cameron had been calling for a freeze, if not a cut, to the proposed one trillion euro budget. But the proposals were rejected after they fell short of that aim.

Mr Cameron, who faced accusations from some continental politicians of scuppering the talks, showed flashes of anger, revealing his call for administration cuts was met with an EU offer to cut "not one euro", alongside threats to the UK rebate. It was worth more then £3 billion last year.

In the war of words that followed the embarrassing failure, the UK made it clear it blamed Mr Van Rompuy.

The leader of the socialist grouping in the European Parliament, Hannes Swoboda, accused Mr Cameron of attempting to blackmail other European leaders.

All 27 member countries now have to return for another summit early next year, with the risk that the national positions will have hardened in the meantime.

Despite the outcome, Mr Cameron has put to bed his reputation as an isolated figure in Europe. The Conservative leader was under intense pressure to get a good deal for the UK following a defeat from his own backbenchers in the Commons on the issue. But Mr Cameron worked with the Swedes, the Danes and Germany to oppose a new proposal put on the table overnight on Thursday by Mr Van Rompuy.

Despite changes to some budget headings the overall figure had barely altered.

On his way into the summit yesterday morning Mr Cameron called for greater cuts, warning now was not the time to tinker. This is thought to have triggered an offer during the day to cut tens of billions off the spending limit.

But it was not good enough.

At a press conference, Mr Cameron said: "The EU institutions have simply got to adjust to the real world. Last night the Commission did not offer a single euro in savings, not one euro. And I just don't think that is good enough. Frankly, the idea that EU institutions are unwilling to even consider these sorts of changes is insulting to European taxpayers."

However, Mr Cameron said he still thought a deal could be done, and Irish Prime Minister Enda Kenny predicted an agreement would be reached early next year.

A deal is crucial before 2014 or the EU will make budget decisions on a yearly basis – costing taxpayers more. Although EU leaders still have time, the lack of an agreement is humiliating.