Negotiations between the European Parliament and Council over the EU's 2013 budget broke down yesterday (13 November) when lawmakers walked out of the talks. The development doesn’t bode well for next week’s extraordinary EU summit for the 2014-2020 budget.

European Parliament President Martin Schulz pulled his negotiating team out of key talks due to be held Tuesday night.

Schulz announced the move in a statement, just hours before the talks were due to begin on plans for EU spending in 2013.

“EP negotiators will not attend the meeting with Council on the budget 2013 scheduled for tonight, because there is no agreement among the member states about a supplementary budget for the current year [2012]. These funds are needed for the European Union to respect its legal obligations, i.e. to pay for bills incurred for goods, works and services delivered,” Schulz said.

In another statement, Alain Lamassoure, chairman of the Parliament's budget committee, said that given “the current impossibility in which [members states] find themselves to solve the problem of the 2012 outstanding balance, the European Parliament cannot continue the budgetary negotiation on the 2012 budget.”

EU coffers ran empty under the 2012 budget for programmes that include priority areas such as education, youth and research. On 23 October the Commission tabled a remedial budget demanding further contributions from member states to safeguard the programme in the 2012 EU budget, to the amount of roughly €9 billion (see background).

Schultz insists that the €9 billion supplementing the 2012 budget should not even be a matter for debate.

Now the Commission has to make a new proposal and the negotiations can start again. If there's still no agreement, emergency procedures will be put in place under which the EU will be able to spend one-twelfth of this year's budget each month.

The European Parliament is involved as a co-legislator for the 65 legislative texts, which will constitute the legal base of the new EU budget. However, with regard to the concrete figures for every category and sub-category, EU leaders have the full power to decide.

November budget summit: mission impossible?

With talks on the 2013 budget stalled, European leaders should find it even more difficult to agree on the long-term EU budget for 2014-2020.

EU leaders are due to meet on 22-23 November for an extraordinary summit to debate and possibly agree on the 2014-2020 EU budget.

The budget talks will be based on a European Commission proposal, presented in June last year, which suggested raising the next seven-year budget to €1.025 trillion, up from the current €976 billion.

A diplomat, who was speaking to the press on condition of anonymity, recently described the EU budget debate as being dominated by the seven or eight net contributor countries, with the Cypriot EU presidency following their positions blindly.

Faced with a veto threat from Britain, which called for a de-facto budget freeze, the Cypriot presidency proposed to reduce the Commission's budget recommendation by €50 billion across all categories.

According to EurActiv France, Council President Herman Van Rompuy could propose even deeper cuts, aimed at satisfying Germany, which pleads for a budget of around €960 billion, equal to 1% of the EU’s GDP.

‘Friends of cohesion’ get support from Parliament

Schulz hosted a meeting yesterday with leaders from 16 European countries in support of the EU's "cohesion policy", which redistributes funds to the bloc's poorer regions in order to support their economic development.

The "friends of cohesion” meeting was attended by the leaders of Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain. Representatives from the employers' organisation BusinessEurope, the European Trade Union Confederation (ETUC) and the European Association of SMEs were also present.

Schulz said that while the idea of cutting the EU budget may be popular in some countries, it could be counter-productive to stimulating the economy and creating jobs. The two co-organisers of the meeting, Polish Prime Minister Donald Tusk and his Portuguese counterpart Pedro Passos Coelho, stressed that the EU's cohesion policy, supporting economically less-developed regions, can be the best policy in times of crisis if it goes hand in hand with better spending.

European Commission President José Manuel Barroso, who also attended the meeting, pointed out that cohesion policy means growth and investment for the EU. He expressed hope that these arguments will be heard at next week's summit and that member states will come to an agreement on the long-term budget, which would be then approved by the EP before the end of the year.