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31/07/2016

European Parliament seeks to expand 2015 budget by 2 billion euros

Euro & Finance

European Parliament seeks to expand 2015 budget by 2 billion euros

[European Parliament/Flickr]

MEPs voted to extend the Council’s proposed 2015 European budget by 2 billion euros, a position that may lead to tough negotiations. EurActiv France reports

The European Parliament voted in favour of an ambitious budget for 2015 on 22 October, approving the text by a large majority of 464 votes to 186. Legislators decided to raise commitment appropriations to €146.3 billion, and payment appropriations to 146.4 billion for 2015. MEPs have also opposed any reduction to the EU’s revenue, blocking 2 billion euros in cuts proposed by the Council.

Jean Arthuis (ALDE), President of the European Parliament’s Committee on Budgets, said this part of the budget would be entirely devoted to development, economic growth, job creation and solidarity projects.

MEPs want to invest an extra €190.5 million in small and medium-sized enterprises (SMEs), as well as research and education programmes, including Erasmus+. Financial supervision agencies and the agricultural and fishing, heavily impacted by the Russian embargo, would also receive increased funding under the Parliament’s plan, to the tune of 6.1 million euros, €30 million and 16.7 million respectively.

The EU’s payment crisis

MEPs have approved two texts on the European budget at this week’s plenary session. One concerns the 2015 budget, and the other is aimed at rectifying the 2014 budget.

The European Parliament is firmly in opposition to the Council, insisting on the need to reach an agreement on the 2014 budget before negotiating the 2015 budget.

The accumulation of debt since 2010, and the looming payment crisis, have become high priority issues for MEPs: the European Union’s debt could reach 30 billion euros by the end of 2014.

>> Read: Aid programmes hit hard by EU budget woes

Alain Lamassoure, the leader of the French delegation within the European Parliament’s EPP group, says that European structural funds account for 80% of the unpaid bills. Money for these funds had previously come from local and regional authorities, but the current lack of funding has led to cut backs, directly affecting SMEs.

“We must not forget that behind these figures and unpaid bills, are citizens who are waiting to be paid. Today we have Erasmus students whose situation is unclear because of uncertainty over the future of their grants,” said the Spanish MEP Eider Gardiazabal Rubial, rapporteur on the 2015 budget.

Jean Arthuis declared after the vote that “such a discrepancy [in the budget] is a disgrace for Europe. The Council and the European Parliament agreed on certain commitments. There comes a time when these commitments have to be honoured. It would be too easy to make commitments without thinking about the consequences”.

>> Read: EP Budgets Committee Chair: ‘EU debt goes against treaties’

Budgeting for growth and employment

MEPs want to strengthen development, research and innovation policies in order to encourage economic growth and employment.

“We all know that the Union needs to give a boost to growth and employment. We all know this will not happen without fresh money. The Council needs to stop its contradictions! It needs to respect the European citizens! It needs to start by paying its debts and keeping its promises!” the French socialist MEP Isabelle Thomas said.

The European Conservatives and Reformists (ECR) disagree with the need for a larger budget. Spokesperson Richard Ashworth said, “We don’t need a bigger budget…we need a better budget. By all means let’s improve our investment in research, development, new technology and communications – but we must create the scope for that by cutting inefficient spending programmes and applying simple strategic priorities.”

Jean-Claude Juncker seeks to give reassurance

Jean-Claude Juncker, whose College of Commissioners was adopted by the Parliament this week, supported the European Parliament in calling on the member states to respect their budgetary commitments. “The European Union cannot be negligent. To be credible, it has to honour its promises,” he declared. The new Commission President has promised to unveil his 300 billion euro investment plan before Christmas.

>> Read: Juncker wins support for ‘last-chance’ Commission

But Alain Lamassoure does not believe the future Commission President appreciates the scale of the problem. “The astonishing thing has been the European Commission’s inability over the last two years to align payment appropriations with commitment appropriations.” He does not think Jean-Claude Juncker’s investment programmes will find the necessary finances, and expects to see the European budget eroded next year. “The question is whether it will become a point of conflict with the council,” he added.

Positions

Xavier Beulin, President of the National Federation of Farmers' Unions (FNSEA) criticised calls to reduce CAP payments.

"The European Commission uses the CAP as an adjustment variable for the European budget, and they also say that the additional funds needed to cover temporary emergency measures do not require extra appropriations to be included in the 2015 budget. Taking into account the measures already decided, there would only be 88 million euro left to help the agricultural sector deal with the crisis in 2015".

Background

EU budget controls have been developed in line with the strict rules established under the treaties. The member states can exercise power over the final budget decisions through the European Council and the European Parliament. The EU budget rose to 135.5 billion euro in 2014.

France is the second largest net contributor to the European budget, after Germany, and is also a major beneficiary of European funding, particularly through the Common Agricultural Policy.

Timeline

  • 28 October: beginning of the conciliation phase between the Council and the European Parliament.
  • 26 November: budget vote in the European Parliament

Further Reading