Speaking in Brussels a week before EU leaders are set to find an agreement on the 2014-2020 EU budget, Italian Prime Minister Mario Monti warned against a political fight which would undermine the need for more growth and jobs, at a time when fiscal consolidation and austerity measures have taken a severe toll on economic recovery.
“There will be no coherence between all the language we employ to talk about growth and the adoption of a budget that does not go along with this,” Monti said Wednesday evening (30 January).
He spoke as he presented his new book co-authored with French liberal MEP Sylvie Goulard, Democracy in Europe, published in French and Italian in November.
Despite the need to inject fresh money in projects aimed at creating new jobs and boost growth, some countries have insisted on cutting €30 billion more from the last proposal – €973 billion – tabled by European Council President Herman Van Rompuy.
Many EU leaders are pushing for cuts to the bloc‘s 2014-2020 budget to reflect the austerity measures they are implementing at home. Disagreements have derailed a deal at the last budget summit in November.
The ‘growth pact’ – forged at the EU summit in June 2012 to assuage fears that the EU was too focused on austerity in its response to the eurozone debt crisis – is at risk of unravelling in the fight over the budget, Monti said.
The pact adopted was "probably insufficient" and now it is "probably at risk of being contradicted next week with the decisions on the budget," Monti added.
The €120-billion pact promised more money for the European Investment Bank and project bonds for infrastructure.
Parliament may reject EU budget
Speaking to a group of journalists on Tuesday (29 January), Green/EFA group co-chair Daniel Cohn-Bendit said that if EU leaders adopt the 2014-2020 budget in line with the latest proposals, “the majority in the European Parliament will refuse it”.
European Parliament Vice President Isabelle Durant spoke in even stronger terms, saying that she hoped that Parliament would reject the budget.
MEP Sylvie Goulard (France, ALDE) added that EU leaders were not in disagreement with Parliament, but in disagreement with themselves.
“In June they decided that it is necessary to re-balance the austerity measures with some growth measures, and the first thing they cut is the research and the future-oriented expenditures,” she said.
Asked by EURACTIV if he too was in favour of the Parliament rejecting the budget, Guy Verhofstadt, leader of the liberal ALDE group, said: “We first have to see the end result. But the end result is determined by a number of elements. In the past, all the groups agreed that if you have to agree on additional cuts, those should be: not in research, not in innovation, not in growth expenditure. That would be completely stupid. You have a limited budget, you’re in an economic crisis, you don’t do that.”
The second element sought by the Parliament, Verhofstadt said, is the flexibility to allow the use of unspent EU money instead of returning it to the member countries.
Third, he said self-generated tax revenue is needed to lower the national contributions. He said that the financial transaction tax, to be adopted by 11 countries, should allow those countries to reduce their national contributions to the EU budget.
Fourth, he said Parliament favoured “a real mid-term review” of the EU seven-year spending.
The liberal group leader also indicated that EU leaders would come to regret if they would force Parliament to reject the budget.
“The consequence of the absence of a real budget is that on the monetary field [EU leaders] will have to stick to more discipline than is absolutely needed, and more solidarity. Because when you don’t have common policies, and you don’t have a common authority behind your currency, you need perfect discipline and solidarity.”
Monti was due in Berlin on Thursday to meet German Chancellor Angela Merkel to prepare for next week’s summit (7-8 February). He is set to meet French President François Hollande this weekend.
The European Commission presented on 29 June 2011 its proposals for the EU's 2014-2020 budget – the so-called Multi-annual Financial Framework.
The Commission proposed raising the next budget to €1.025 trillion, up from the current €976 billion. This represents a 4.8% increase, which is beyond the average 2% inflation recorded in the last decade.
The European Parliament declared in a resolution on 23 October that even the original Commission proposal for freezing the budget at the 2013 level would not be sufficient to finance existing policy priorities in the "Europe 2020" strategy, which comprises the new tasks laid down in the Lisbon Treaty.