BRUSSELS: The European Union is scaling back its digital budget by 17.5% to help it catch up with the United States and China in key technologies, according to a proposal to EU leaders haggling over an economic recovery package to combat a COVID-19-induced recession.

The European Commission had earlier this year proposed an 8.2-billion-euro ($9.4 billion) budget for its Digital Europe programme to boost the bloc's competitiveness in supercomputing, artificial intelligence and cybersecurity.

The EU executive is looking to digital technologies and ambitious environmental goals to underpin sustainable economic growth and reduce its reliance on other countries and foreign companies.

"The financial envelope for the implementation of the Digital Europe programme for the period 2021-2027 will be 6,761 million euros," according to the document seen by Reuters.

An ambitious 100 billion euro research and innovation programme called Horizon Europe is being trimmed to 75.9 billion euros.

The paper is meant as a basis for a compromise agreement after four days of acrimonious talks on the package.