Germany and six other countries have co-sponsored a call to freeze the EU's next seven-year budget for the period 2014-2020, according to a document obtained by euractiv.de. But France remains undecided for now as the new Socialist government has yet to take a definitive stance on the issue.
In a non-paper, the seven countries affirm their conviction that “the Commission’s proposal is significantly in excess of what is needed for a stabilisation of the European budget at a time when member states are undertaking tough consolidation efforts”.
The signatories include Germany, Austria, the Czech Republic, Finland, the Netherlands, Sweden and the United Kingdom.
In June last year, José Manuel Barroso, president of the European Commission, proposed to increase the EU budget from the current €976 billion to €1,025 billion for the next seven-year period, which starts in 2014 (see background).
The seven-country club – which at the time also included France, Italy and Denmark – slammed the Commission proposal as too high.
But in the meantime, France and Italy have had new leaders and their official position has not been definitely firmed up. Meanwhile, the Czech Republic has asserted its eurosceptic leanings by refusing to sign the ‘fiscal compact’ treaty for stricter budget rules.
“We need to spend better, not to spend more,” the seven countries state.
The non-paper pleads for a “higher quality of spending,” better financial accountability and “much stricter rules” to ensure close links between fiscal and economic coordination and EU spending. The seven countries also call on the spring European Council to address on a regular basis the question of whether the objectives of EU funding have been achieved.
“If progress towards these objectives is inadequate, it should be possible to reroute further funding,” the document reads.
'Higher quality of spending'
The seven countries plead for allocating EU monies for innovative and high-tech projects, rather than on regional policy. “[EU spending] should be more ambitiously geared towards investment in the EU’s research, education and innovation effort and in sustainable growth and employment,” they state.
Many of the Eastern European EU countries, including Poland and Hungary, are opposed to reducing the overall volume of the EU budget, and especially the regional funds which benefit the EU's poorer members.
These countries want those so-called structural funds maintained at the same level or even increased. The Parliament goes even further and demands an increase of the EU budget by 5% to 1,076 billion euros.
The non-paper also pleads for member states to continue co-financing EU-sponsored projects. The Commission recently proposed lowering the level of national co-financing so that countries in financial difficulty can continue benefiting from EU-funded projects at a time when they need it most. These include Greece, Ireland, Portugal, Romania, Latvia and Hungary.
France reconsidering its position
France, however, has not signed up to the non-paper, signalling a possible policy shift from President François Hollande.
Nicolas Sarkozy, the former French President, had clearly sided with Germany, the UK and others in asking for an EU budget freeze. But according to euractiv.fr, the new French government led by Jean-Marc Ayrault has reserved itself the right to review the country's position.
The first statements of the new Minister for European Affairs, Bernard Cazeneuve, are indeed more ambiguous.
"If we want to honour the commitments we made to the Union on the recovery of our public finances, it is imperative that we ensure that our contribution is useful and reasonable at the same time," Cazeneuve told journalists during his first visit to Brussels on Tuesday (29 May).
The EU budget, Cazeneuve explained, should support France's pro-growth agenda without compromising the country's deficit-reduction commitments.
"The contribution of France to the European Union budget is around €20 billion per year. It is therefore a significant contribution. So we have this balance to strike between the desire of ours for a budget that allows the realisation of our ambitions and at the same time create the conditions so that all this does not undermine fiscal balances that must be reached."
Pressed by journalists to clarify what this meant, Cazeneuve conceded: "The French position is not definitely firmed up."
On 29 June José Manuel Barroso, president of the European Commission, proposed to increase the EU budget from the current €976 billion to €1,025 billion for the next seven-year period, which starts in 2014.
This represents a 4.8% increase, which is beyond the average 2% inflation recorded in the last decade.
In a bid to woo member states that are opposed to further rises in the EU budget, the Commission proposed to reduce national contributions, in line with austerity measures adopted across Europe.
To allow this, it suggested levying new taxes directly, a proposal that was strongly rejected by the UK, which labelled it "unrealistic".
The EU tax could take several forms: A tax on air transport or a share of new financial, corporate or energy taxes, as well as an EU VAT.
The EU budget for 2014-2020 is expected to be agreed by the end of the year, although no deadline has been set.
- By end 2012: New EU budget for 2014-2020 expected to be agreed although no deadline has been set.
- 2014: Start of next seven-year financial period.