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06/12/2016

EU negotiators strike deal on 2015 budget

EU Priorities 2020

EU negotiators strike deal on 2015 budget

European Union lawmakers and the EU’s 28 member states have reached a preliminary deal on next year’s budget, on condition that the bloc’s executive Commission finds a way to pay off unpaid bills totalling more than €20 billion.

“Parliament’s negotiators agreed to the 2015 budget on condition that the Commission presents a plan to reduce the amount of the unpaid bills to a sustainable level by 2016,” the legislature said in a statement.

Lawmakers said on Monday (8 December) that it was now up to the European Commission to take action to reduce the mountain of unpaid bills, which jumped to €23.4 billion at the start of this year from €5 billion in 2010.

Both sides reached an impasse last month after EU governments rejected a demand from the European Parliament to use windfall antitrust fines to pay down the bills.

>> Read: EU budget talks stalled, as net payers want their money back

Governments have long battled with the European Parliament to hold down EU spending, which accounts for only about 2% of all public expenditure across the bloc. The bulk of the funds are used to support farmers and underdeveloped regions.

But without a top-up, Parliament negotiators warned unpaid bills would rise further, threatening an eventual collapse of the budget.

“The winding down of a pile of unpaid bills has been Parliament’s quintessential goal. We cannot go on rolling invoices over from year to year due to a lack of resources, just watching as cash-strapped contractors suffer and the EU loses its credibility as a reliable partner,” said French MEP Jean Arthuis, the chair of the Parliament’s budget committee who led the talks for the EU Assembly.

More funds for education and research

The two sides agreed to a total of €141.2 billion in European spending next year.

Parliament negotiators obtained €45 million more for the EU research and development programme Horizon 2020, and €16 million more for the student exchange programme Erasmus+. For foreign policy, the budget was increased by €32 million. Banking supervisory agencies and Frontex also received more funding, the Parliament said in a statement.

“We know member states’ difficulties, but it was the member states themselves which agreed to enter into contracts that need to be paid. The bills of the EU are also part of their debt,” Arthuis said.

Formal approval of the deal is scheduled at a Parliamentary session between 15 and 18 December.

Positions

Guy Verhofstadt, the leader of the Liberal ALDE group in the European Parliament said he was satisfied with the budget deal, saying the additional payments would stabilise the budget for 2014 and 2015.

"But ALDE wants to do more than stabilising the EU debt level. Our main goal is to reduce it further," Verhofstadt said. "That is why our team negotiated the principle of a debt reduction plan" to be agreed upon before the draft EU budget for 2016 is presented next year.

Verhofstadt also stressed that the ALDE's firm stance on the budget had "nothing to do" with attempts to inflate the EU budget. “It is a matter of honouring previous commitments made. We never wanted to spend more than what was previously agreed. The EU budget was in trouble because member states use it as a credit card without wanting to pay the billing statements. This is an unacceptable situation. The last thing we want is that Europe becomes a hideaway for national debt.”

Alexandra Makaroff, Head of Plan International’s EU office said, "“By finally reaching agreement, the EU has managed to avoid a major budgetary crisis. There was simply no alternative. But the deal on the table represents the bare minimum required for the European Commission to function and fulfil its obligations to partners around the world.

“With the majority of the debts accumulated in previous years transferred over to the 2015 budget, it is still highly likely that the Commission’s development cooperation coffers will run dry in 2015. The impact of this will be felt far and wide, with fewer contracts signed and beneficiaries forced to pre-finance their projects. We are already seeing this happen now. Ultimately, millions of women, men, girls and boys around the world who rely on EU aid to help pull themselves out of poverty will feel the effects of this crisis.

“This saga must serve as a wake-up call to address the underlying cause of these snowballing debts. It is critical that a structural solution is found as soon as possible, without jeopardising progress towards sustainable development which has been achieved in recent years. The Commission has demonstrated its eagerness to tackle the problem and Commissioner Georgieva has already presented a plan of action, but it relies on the support of the Council and Parliament if it is to succeed in reducing the level of unpaid bills in a sustainable manner.”

Background

At a summit on 8 February, EU leaders reached agreement on a €960 billion long-term budget for 2014-2020, representing the first net reduction to the EU budget in history.

After months of complex negotiations, the European Parliament finally approved the EU’s budget for 2014-2020 on 19 November 2013 (click here, for pages 1 to 31).

€960 is the sum for commitment appropriations and €908 for payment appropriations.

The procedure regarding the EU annual budget is as follows:

  • first the Commission presents the draft budget (done on 11 June this year)
  • then the Council reacts, followed by Parliament
  • If the Council cannot agree to the Parliament's position, a 21-day conciliation procedure follows to find a compromise between the two institutions.

If the conciliation procedure fails, as happened in 2010, 2012 and this year, the Commission must present a new draft budget. This is what happened on 28 November.

>> Read: 2015 EU budget in dire straits

Timeline

  • 15-18 Dec.: Parliament plenary to formally endorse budget agreement

Further Reading