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04/12/2016

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

Social Europe & Jobs

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

Kristalina Georgieva [Georgi Gotev]

The 2015 EU budget is in doubt, as member states have rejected a proposal of the commission to bridge the shortage of €4.7 billion in the 2014 budget using additional resources available in the EU budget, coming from fines, saying they wanted this money back to their coffers.

Vice-President Kristalina Georgieva, who is in charge of the EU budget, published a laconic statement today (18 November), making it clear that the trilateral conciliation between the Commission, the Parliament and the member states over the 2015 budget has failed. The negotiations between the three institutions continued until the midnight deadline.

On its behalf, the Parliament stated that it could not accept the Council’s stance, which would halve the sum the Commission asked for to pay the most urgent bills.

In the coming days, the Commission will put forward another proposal, and will work with the member states and the Parliament to get an agreement before the end of the year, the statement reads.

Commission spokesperson Jakub Adamowicz was besieged by journalists, but didn’t say more than the official communiqué.

As the former budget commissioner Jacek Dominik had explained three weeks ago, member states are pushing for cuts to the Commission’s draft budget for 2015, in conflict with the Union’s main priorities. As an example, for the budget heading covering growth and jobs, including youth unemployment, €1.3 billion in payments are cut.

>> Read: Member states slash EU budget for growth and jobs, innovation

“How credible can an EU be which tells member states to control their public spending and yet puts entrepreneurs, researchers and Erasmus students in difficulty by not honouring its commitments?” stated the leader of the parliamentary delegation Jean Arthuis (ALDE, France).

For 2014 the Commission has proposed an amending budget of €4.7 billion, at the same time indicating that almost the entire amount was in fact available, as a resource coming from fines imposed on companies under EU’s competition rules.

The Parliament agrees with this approach, but member states said they would prefer to channel the extra income back into their national budgets.

The amended budget aims to bridge a backlog of the EU budget which comes from the fact that every year, certain payments are transferred for the following year, because bills stop being paid by October, and bills that arrive later are transferred to the following year. Normally this hasn’t caused problems, but in the latest three years, the amount of bills has substantially increased, from €10 billion to €23 billion. In some areas, as in cohesion policy, the backlog now constitutes half of the budget line.

Both the Commission and the Parliament want to reduce the pile of unpaid bills. Commission President Jean-Claude Juncker has stated that the EU cannot be a “bad payer”.

Parliament also wants to secure €11 billion in aid funds to deal with natural disasters, mass redundancies and humanitarian crises for the period 2014-2020, in addition to the amounts agreed in the EU’s seven-year budget.

If there is no deal on the 2015 budget by 1 January 2015, the Union will have run on “provisional twelfths”, i.e. one twelfth of the 2014 amount for each month.

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).  The budget regulation was approved by 537 votes to 126, with 19 abstentions.  The accompanying Inter-Institutional Agreement was approved by 557 votes to 118, with 11 abstentions.

Further Reading