French prime minister Jean-Marc Ayrault has rejected a draft budget proposed by European Union chief Herman Van Rompany, saying the limits it proposes on farm subsidies were unacceptable.

"This proposal in no way constitutes a basis for negotiation that is acceptable for France in terms of ceilings on spending proposed for the common agricultural policy," Mr Ayrault said in a statement.

Mr Ayrault said France was ready to seek an agreement at next week's talks on the seven-year budget, which Britain, pushing for spending cuts, has already threatened to veto.

Reuters