EU budget 2014-2020: The €1 trillion deal

  

Is €1 trillion too much or not enough to fund the many activities of the European Union for the next seven years? This is the main question that European institutions and the 27 member countries’ leaders will have to answer early next year.

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Overview

At roughly €130 billion a year, the EU's annual budget is equivalent to around 1% of EU national wealth, or €244 per EU citizen.

The European Commission proposes raising it to €146 billion over the next seven-year period (2014-2020), or €1.025 trillion in total.

The EU budget covers all of the Union’s activities, and only complements national budgets. As much as 80% is spent by national or regional governments in EU member countries. These governments are responsible for selecting beneficiaries. They are the first port of call for ensuring the money is spent correctly. While critics claim that most of the budget is spent on administration; in reality, these costs usually amount to less than 6% of the total.

With the enlargement of the Union, the budget has grown as well, a trend which is set to continue as Croatia prepares for EU entry in 2013.

But in the context of the eurozone crisis, while most member states adopt austerity measures at the national level, several governments, led by Britain, believe that the EU budget should be slimmed down too.

The European Commission, many MEPs and most of the new member states have taken the opposite view and have claimed that money spent at EU level has a higher added value and contributes towards combating the financial crisis.

The EU institutions now have to decide on the budget for 2014-2020. In EU jargon, this is called the multi-annual financial framework (MFF). They have set themselves the goal of reaching a compromise before the end of 2012.

Actions and projects funded by the budget reflect the priorities set by the EU. These are grouped under broad spending categories (known as ‘headings’) and 31 different policy areas.

The percentages of spending in the main budget headings for the last MFF (2007-2013) were:

  • Competitiveness and cohesion: 44.6%
  • Natural resources, agriculture, rural development, environment and fisheries: 42.5%
  • Citizenship, freedom, security and justice: 1.3%
  • The EU as a global player: 5.7%
  • Other, including administrative expenditure: 5.9%

Following bilateral negotiations on 22 November 2012, European Council President Herman Van Rompuy presented heads of state with a revised EU budget. In the new version he proposed heavy cuts in certain categories and increases in others.

>> Read: The EU's new budget blueprint in figures.

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