Poland's deputy prime minister said on Wednesday that a new proposed agreement on the future EU budget meant that the reasons for Warsaw and Budapest to veto it have "practically disappeared".
The comment came a day after Hungarian Prime Minister Viktor Orban said there was "a good chance" of a deal being struck at Thursday's European summit on the EU's budget and coronavirus recovery fund.
Budapest and Warsaw last month blocked the EU's 1.8-trillion-euro ($2.1-trillion) budget and virus rescue package over its tying of funds to respect for the rule of law.
Both governments are accused by Brussels of rolling back democratic freedoms, notably judicial independence in Poland and press freedom in Hungary.
"The reasons for Poland and Hungary to take a different position from other EU countries have practically disappeared," Poland's Deputy Prime Minister Jaroslaw Gowin told reporters in Warsaw on Wednesday.
"The position of the German (EU) presidency is also similar to the position of Poland and Hungary, but of course unanimity is required for an agreement at the European Council," said Gowin, who leads a junior coalition party in Poland's nationalist government.
"For now, there's agreement in the Warsaw-Berlin-Budapest triangle. I believe that this agreement will also cover the other 24 capitals of Europe," he added.
But there was no hint of a compromise in Berlin on Wednesday. EU powerhouse Germany currently holds the bloc's rotating six-month presidency.
Speaking in parliament, German Chancellor Angela Merkel declined to predict whether a quick solution could be found in the dispute: "Unfortunately I can't tell you whether it will work or not".
Both Hungary and Poland have threatened to veto the budget and recovery fund if the German EU presidency presses demands that the bloc's member countries respect rule-of-law criteria in order to receive funds.
"I believe that we have a good chance to close this file this week at the summit on Thursday," Orban said during a visit to Warsaw to consult his Polish allies on the issue.
"There is a centimetre that separates us," Orban said on Polsat News channel.
The nationalist Hungarian leader however underlined that Warsaw and Budapest remained "on one side and that the German presidency is on the other. We have a chance at a Polish-Hungarian victory".
Polish Prime Minister Mateusz Morawiecki said on Tuesday that Warsaw was sticking to its veto threat and was prepared for all scenarios.
"We're prepared for months of talks and negotiations but we are also prepared for a possible provisional budget, so we're not ruling out any scenarios at this stage," Morawiecki said.